Today it is more efficient to lease out the dwelling than to sell it
Riga, May 12th, 2009
Information presented by Latio
According to Maris Grinbergs, Latio market analyst, the prices have reached the level, when it is more efficient to lease out the dwelling than to sell it.
According to Latio market report data, in April an average price for the serial apartment in Riga decreased for 12% and reached 555 EUR/sq.m (in March this price was 630 EUR/sq.m). We have reached the level of prices of the beginning of 2005, when similarly rapid movement of prices was observed, though it was ascending.
The major part of deals, as usually, takes place in Purvciems and Plavnieki. Therefore, slight decrease in prices is observed in these districts. There are deals with the price lower than 500 EUR/sq.m, which also influence the average price.
Since the autumn of the last year the decrease in the rental prices became as rapid as the decrease in selling prices. The rental offer is much broader than that of selling. However, it is also evident that the rental offer of cheap apartment is decreasing. Latio Teika Department manager Janeta Linkuma refers this fact to the end of the heating season. The requirements of the apartment dwellers remain high – they search for an apartment in good condition and definitely with household appliances.
As earlier expected, trade experts admit the shortage of good apartments with the corresponding price. It is difficult for purchaser to select the definite property due to the small offer.
The number of deals without credit resources is increasing;the deals are concluded in cash. Purchasers are extremely cautious, as they seek the required offers for a long time, and finally can fail to purchase anything at all. Generally, purchasers express their interest in the cheapest offered sites with the price till 22 000 EUR. Market activity is also exhibited by foreigners assessing the possibilities of investment.
The number of selling offers continues to decrease. Latio trade experts admit that still among the offers dominate free unrepaired apartment without credit liabilities.
In case of the property in pawn, if the selling price does not cover the whole credit amount and the seller succeeds in agreeing with the bank, the latter is ready to reassign the remaining part of the credit as consumer credit. However the banks ever insistently disallow to reduce the prices for the mortgaged apartment. There are cases when the bank prior to the public sale redeem the property, for which the borrower is unable to pay any more, and allows the former owner remain in the apartment as a dweller.
In the market of private houses the interest is attracted to the ready houses in the places with good infrastructure with the price till 100 000 – 150 000 EUR. The offer of such houses is small. Janeta Linkuna admits that the land for building is not in request.
The number of deals with apartments in Riga remains relatively small. However, there is a recent tendency to increase, which is party explained by the settlement of legal relationships between the relatives, as well as between creditors and borrowers, and, thus, can not be considered as the sign of revival of the market. The number of deals will only increase after the economic situation is stabilized, when people will be confident about their future and there will be no risk of losing the job.
