Real estate market in 'slow motion' mode, says agency

Latvia's real estate market is currently in "slow motion" mode, with both buyers and sellers expecting prices to move in their favor, according to data from real estate agent Latio.

"Over the past few months, the housing market can be described as a movie in slow motion. Transactions are taking place, but at very different rates in different segments. Buyers and sellers each hope for changes in price correlations in their desired directions – sellers for an increase, buyers for a decrease," said Latio.

However, significant fluctuations in prices are not being observed according to Latio's monthly "Confidence Index of Home Buyers" for December 2022.

According to Latio's data, it ook 70 days on average to sell a home at the market rate (up from 61 days in November and just 28 days in July – there is clear seasonality in the real estate market).

5% of houses were sold within one month from the moment of publication of the advertisement ( the same figure as in November, while in July it was 16%);

According to Latio, 52% of sellers have asked for a disproportionately high price for the market situation (in November – 51%; in October – 55%; in September – 58%; in August – 63%; in July – 60%);

Just 1% of buyers offered a higher price than indicated in the advertisement (in November – 1%; in October – 2%; in September – 2%; in August – 4%; in July – 7%);

Meanwhile, 29% of transactions took place without borrowing (in November – 28%; in October – 26%; in September – 26%; in August – 26%; in July – 24%).

"We see that in transactions in which funds are invested without attracting loans, currently the absolute majority of properties are bought with the aim of renting them out later. In addition, when choosing this type of investment, buyers carefully monitor the offer beforehand, while waiting for a property whose current price, probable rent and potential future value will form an acceptable combination for them," said Latio market analyst Ksenija Ijevleva.

"Buyers who can afford it and want to invest are well aware that different objects for the same price will have different values ​​over time. For example, an Art Nouveau apartment in the quiet center [of Rīga] and a private house in Mārupe can currently cost the same – around 350,000 euros, but the value gap between these objects is relatively large. While the apartment is influenced by the cultural and historical aspect, its value will remain for decades, even centuries, while a traditional private house in a couple of decades will become old-fashioned."

Summarizing December's data on housing supply of new projects in the first-time market, it can be seen that in the center of Rīga since the beginning of last year, property prices in this segment have grown by an average of 15%. If in the first quarter the average price for such a home in transactions was 2,780 EUR/m 2 , now it already reaches 3,200 EUR/m 2, and in advertisements even 3,330 EUR/m 2.

On the other hand, in the suburbs of Rīga, the increase was on average 7%, and the average price in transactions in December was 2,150 EUR/m 2, and in advertisements 2,450 EUR/m 2 .

On the other hand, the average price of older-style serial apartments in December was 1080 EUR/m2, experiencing a 3% drop compared to the third quarter of the year.

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