Slowdown in real estate deals in Latvia

After a sharp rise in real estate transactions just a year ago, there is now a pause in the property market. Both apartment and house buyers and banks are waiting. For the most part, this is due to uncertainty about the future of interest rates, Latvian Radio reported on January 10.

At the end of last year, there were 3,090 apartments for sale in Rīga, or 9% less than a month ago, the real estate market company Latio said.

Elīna Dūce, the company's head of property deals, said that with credit interest rates rocketing last year there is a conviction in the market that it is more advantageous to rent a home in Rīga than to buy it with a mortgage loan.

“Right now people are better at renting than they are making a credit decision, for some the financial situation is not such as to take the loan right now and banks may be refusing some. The rental market was indeed active enough in the fourth quarter of the previous year,” Dūce said.

In terms of purchases, this year started with a surprise, “already in the first week people are calling, actively interested and want to buy,” and about 40%-42% of interested people buy properties without credit, Dūce noted.

According to Latio, only 30% of interested parties bought housing without bank loans a year ago, so it can be concluded that interest in loans has diminished, although it might just begin to grow, as the Euribor rate rise has been halted and a drop is expected in the future.

Meanwhile, Māris Laukalējs, a board Member of Arco Real estate, said that after a hike early last year, market activity has fallen sharply, especially in the new housing segment.

“Our explanation is that prices in the new projects segment and private homes segment are strongly higher, averaging between 150,000 and 200,000 and above. And there, obviously, the impact of the Euribor rate is very significant, which isn't that significant in the serial apartment segment. So the serial apartment market is maybe more active than it has been for other years because people look more at what they can lift in this situation,” said Laukalējs.

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