Most homes sold and bought in Latvia are Soviet-era flats

The high Euribor interest rates set by the European Central Bank (ECB) have had an impact on the property market. Currently, residents mainly buy serial Soviet-era building apartments, besides, a large proportion do not use bank loans, but buy apartments at their own expense, Latvian Radio reported on April 15.

Kaspars Sausais, head of mortgaging at the bank Luminor, said the most active segment in the housing market right now is apartments in typical or serial houses built during Soviet times, and renovated two-room apartments were most often purchased.

“In the first quarter, similarly as last year, the 464th series, or so-called Lithuanian project house, is the most popular, followed by Khrushchev time projects and special projects. The biggest pluses for such homes are their availability, both in terms of price and location. The average price of a serial apartment is around one thousand euros per square meter. It should be assumed that most buildings of this type have not been renovated.

"If we look at Lithuania and Estonia, these prices are much higher. Serial apartment prices are close to the 3,000 mark. We can therefore conclude that availability is relatively higher in Latvia than in our neighboring countries,” the bank representative said.

Sausais said residents' interest in mortgage loans to buy a home dropped last year, but interest usually returns in the spring. However, data compiled by Latio shows that while there was more interest from buyers in March, they were willing to buy properties in the secondary housing segment at a price 30 percent lower than what the seller set.

"What we are observing now in March is that more and more people are buying real estate at their own expense, i.e. if 30% [of buyers] bought apartments at their own expense in the autumn, it's 50% in March this year because people are still afraid to take a loan from banks. [..],” said Elīna Dūce, head of real estate affairs at Latio.

Māris Laukkalējs, Board Member and head of the valuation division of Arco Real Estate, said that prices for apartments in new projects have fallen slightly due to high Euribor rates, but many have postponed house purchases pending lower rates.

“At the beginning of 2022 there were individual projects that sold above €3,000 per square meter, then towards the end of the year, I would say the average price is around €2,600 per square meter. And so we see that the difference between the average series type apartment price of 850 euros per square meter and 2,600, well, is triple. That's why the number of new project deals also dropped so significantly. Our forecasts, if indeed [Euribor] rates start to fall in the summer, then activity could come for the autumn months. I know that several big developers of new projects have been kind of interrupted for some unknown time, and rates fall and turnout is higher, I have concerns that the number of new project apartments is going to fall, which in turn is calling for a faster price rise,“ said Laukkalējs.

The largest activity of house buyers remains in Rīga and the largest cities – Valmiera, Cēsis, Jelgava, and Liepaja.

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