Rising prices in housing market in Latvia

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In 2021, there was a drop in supply in the housing market, which meant a rise in prices, Kaspars Lukačovs, head of mortgaging at Luminor bank, said in an interview with Latvian Radio February 3.

He said that 10% fewer new projects were finished in 2021 due to the pandemic, leading to a lack of supply in the housing market, with demand remaining high and prices rising.

As a result, the housing market is being driven from the seller's side, i.e. the small supply will often lead the trader to sell the dwelling to the highest bidder, even if the buyer has already agreed on a price. Therefore, the price of housing and the conditions for purchasing housing should be given a great deal of attention at the moment, Lukačovs noted.

“We could see [price] increases in new projects. In individual segments, even by 30% during the year. If there was a possibility of purchasing a new apartment around the end of 2020 for around €1700 per square meter, then finding [an apartment] below €2200 [per square meter] at the end of last year was an extremely difficult task,” Lukačovs told LTV.

Asked about the impact of the energy price crisis on the real estate market, the specialist said it will be seen this year. 

According to the Baltic Housing Affordability Index published in December 2021 by Swedbank, the surge in housing prices in Rīga was less steep than in other Baltic capitals. Central Statistic Bureau's data on housing prices is available here. The data on 4th quarter of 2021 will be published in March.

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