Latio: The offer of affordable private houses is limited
7 May 2010
Riga
Interest in purchasing private houses in Riga and its vicinity has slightly increased;however, affordable offers that satisfy the buyers’ requirements are few, shows the Latio market report.
Like in all housing segments, the potential buyers wish to purchase completed houses to move in immediately, without worrying about construction, finishing or repair works and additional expenses.
“Overall, the offer of private houses is large – however, many have been put up for sale at inadequately high prices. There is currently a lack of completed, medium-sized private houses suitable for average buyers. There is usually one reason for the high prices of the private houses currently offered – the credit obligations of the sellers, which limit the possibility of reducing the price,” explains Vija Gailīte, head of Latio’s apartment and private house sale department.
Most of the potential buyers that show interest in private houses in Riga and its vicinity wish to purchase high-quality houses with an area up to 150 square meters, at a price of 150–170 thousand euros – not more than 200 thousand euros. Suitable offer is limited – the prices of houses are either significantly higher, or the houses offered at this price level are ones that should actually cost less – up to 100 thousand euros – considering their location, infrastructure, size, materials used, time of construction, quality and other factors.
“There are cases when the seller does not agree to a lower price corresponding to the quality of the house and the market situation, and, after an extended period, does manage to sell the property for a higher price. However, such cases are very rare and the difference in prices is not large. Often, owners use a very simple method to determine the selling price of the house – the price of the land, purchased at a time when the market was making new highs, and the costs of construction at the time when the prices were at their highest. By establishing the price of a house in this way, one cannot hope to recover the invested funds,” underlines Ināra Grīnberga, head of Latio’s Elizabete department.
She adds that the limited offer creates a situation where buyers are purchasing private houses at prices exceeding their actual value. In the near future, it can cause growing interest in purchasing private building plots.
Some of the private houses available for sale have not been mortgaged;however, their sellers are mostly unwilling to lower the price, in spite of the low interest in these houses precisely due to the high prices. There is a relatively large number of Soviet-period private houses being offered at inadequately high prices, which reduces the possibility of selling them.
