While planning the purchase or construction of a private house, residents have become more cautious and are building smaller private houses of up to 150 square metres. The head of Swedbank's mortgage lending business, Normunds Ducis, said that construction costs of private homes increased from 10 to 15% in the first half of this year.
"In the past year, the area of private houses has fallen by 13 square metres. [..] In principle, we've lost a whole room. In this way, our citizens are also reducing these potential construction costs. Because the building is smaller, its maintenance will also be cheaper and more thought-out,” said Ducis.
Because of the increase in energy prices, residents think much more about the energy efficiency of private houses. Although most of the wood buildings produced in Latvia are exported to Scandinavian countries, in Swedbank's portfolio 40% of private houses are wooden, the advantage of which is rapid installation.
Luminor bank's expert Kaspars Sausais also said that private housing is getting smaller.
"Houses whose area exceeds 200 square meters in the indoor area are rare. For example, if customers [..] used to not think about solar panels, then now we see they think about the costs and the heating bill," said Sausais.
The chief executive of wood construction cluster Kristaps Ceplis said that the largest construction activity is in Riga and Pierīga, and it is almost impossible to get a mortgage for building a private house in the regions. It's been a big problem for years.
"The farther from Riga, the lower the market value for which transactions are sold. And if we look at an honest entrepreneur who pays adequate remuneration, who pays for employees' taxes, and buys materials in a fair way, then it is not possible to build a family house at a price that financial institutions are prepared to finance. [..] Unfortunately, the economic development of the country is that there are lower wages, lower incomes and worse markets in regions,” said Ceplis.