Latio: in October, the average price of apartments in Riga has increased by 3%; the amount of transactions remains low
Riga, November 10th, 2009
"Latio"
According to the data of Latio’s monthly report on the real estate market, in October the average price of apartments in Riga was 515 EUR per square meter, by 3% higher than in September.
This is the second month this autumn when Latio has observed a price increase in individual segments of housing. After a two-and-a-half-year decline of the real estate market, the average price of apartments has increased by a total of 4.7% since the low point this summer, shows the market analysis by Latio. It must be pointed out that the price decline is still ongoing in some housing segments.
A price increase in October has been observed in the districts of Purvciems, Pļavnieki, Zolitūde and Imanta. A small decline of prices continues mostly for three- and four-bedroom apartments in several city districts. No price changes have been observed in the center of Riga.
In October, the prices of single-bedroom apartments in Riga fluctuate between 15 000 and 25 000 EUR, depending on the building project, floor, condition and location. The prices of two-bedroom apartments fall between 18 000 and 30 000 EUR. The prices of three-bedroom apartments are 24 000–38 000 EUR, four-bedroom apartments: 37 000–44 000 EUR, shows the Latio market report.
The buyers that were waiting for the lowest price point are realizing that offer is limited and the prices are slowly starting to rise, and thus are beginning to actively search out properties for purchase. The demand remains greater for single- and two-bedroom apartments, with considerable activity in the 602 series and Lithuanian project buildings. Buyers display interest in apartments in the new project houses in various stages of completeness, in the price category of 600 to 900 EUR per square meter. However, offers at such prices are rare.
The number of transactions entered in the Land Register has not significantly changed during the autumn months;it is in fact slightly lower than during the summer. The amount of transactions remains low – at a third of its historical maximum level.
The offer of apartments is experiencing a considerable decline. During the past month, after observing the stagnation of the apartment offer and prices, sellers are becoming ever less willing to reduce their price. The offered prices in October exceed those of September by 7–10%. Buyers are not willing to pay the demanded prices, as their purchasing power is limited. This explains the still-low level of registered transactions.
“When the prices were falling prices, sellers made the decision to rent out their property rather than sell it. Today the rental market is saturated, the rental prices are falling, and owners are again ready to offer housing for sale, creating offer at a higher price than that at which transactions are actually carried out,” points out Vija Gailīte, head of Latio’s apartment and private house sales department.
Prices in the rental market are still relatively low. Latio market analyst Māris Grīnbergs believes that the rental prices will continue to keep in step with Latvia’s GDP.
Interest is still demonstrated by foreign investors that are reacting to the pricing changes and continue to demand unreasonably low prices. As pointed out by Māris Grīnbergs, money is cheaper on the global market, and it serves as a reason to borrow money from abroad and invest it in the real estate of Latvia, after there is more certainty about the economic and political stability of Latvia.
The current price level in the housing market is, on average, at a third of its peak in the spring of 2007, and has now reached the level of 2003–2004. The sales experts of Latio emphasize that, for those buyers who were waiting for the lowest price point, this is the best time to make the decision, and recommend making use of expert consultations. Latio offers free consultations at its branches.
Latio is a full-service real estate company in Latvia;it began operation in 1991, during the earliest stage of Latvia’s real estate market. Latio employs 170 professionals in 29 branches throughout Latvia.
To order a more in-depth market analysis, call (+371) 67032300, e-mail latio@latio.lv, or visit the Latio central office in Riga, Raiņa Boulevard 11.
