As opposed to housing prices falling dramatically as they did after the previous crisis, prices on the market are now stable. The main changes are in the rental market: short-term rental stopped due to the lack of tourists and prices have fallen. Interest in small houses and lots in Riga vicinity has grown.
Swedbank determines the housing availability index every quarter. Comparing apartment prices, average wages and interest rates, the ability of residents to purchase a 55-square-meter apartment is assessed, with mortgage credit up to 30% of family income. Swedbank economist Līva Zorgenfreija estimated that although there are changes in the housing market, housing availability remains high.
“Household incomes in Q1 this year were even 83% higher than needed to be able to afford to buy a flat. Of course, every household has a different situation, but overall housing has been available. This means that the prices we see on the market are not overvalued, as it was before the previous crisis. [...] In terms of mortgage loans, people have become more cautious,” the economist said.
The head of the Latio Housing Trading Department, Evija Dzenīte, said that the housing market had stopped following the introduction of an emergency in March, and buyers' interest returned in May and June.
However, banks are more strict and give out mortgage loans to only 20%-30% of customers.
“As we know, there are sectors that have problems, so banks sift through which customers' finances are going pull through, and there are fewer positive answers,” the Latio spokeswoman said.
Kristīne Dubane, a certified real estate agent, said that the COVID-19 crisis had the greatest effect on the rental market.
"As tourists aren't coming, there are a lot of apartment free at the moment, so there is a lot of supply in the rental market, and there is a lot of change: those who find their rent too high switch to cheaper housing.
Prices have fallen most in Old Riga and center of Riga, the most expensive, exclusive segment.
The head of Latio's Housing Trading Department said there was an increased interest in building lots and small houses in the Riga vicinity.
What to do – buy estate now or wait in anticipation of falling prices in the autumn? The experts recommend that if bank credit is needed, real estate should be purchased now. If the economic situation doesn't improve, bank lending rules could become even tougher.