Latio: The demand for the mansions has grown; the corresponding offer for customers is limited
30 July 2010
Riga
The customers’ interest in purchasing mansions has increased in the first half of the year, while the total number of the purchases in Latvia in comparison with the last year has decreased. According to the survey of the mansions market for the first half of 2010 prepared by Latio, the main reason of the decrease in deals is financial abilities of customers and limited offer of the corresponding quality housing.
Similarly to the other housing segments, in the first half of the year the increase of potential customers was also noticed in the mansion sector. “As compared to the last year, the attitude of people has changed, and they have become more optimistic about their future. Those who decided to change their living conditions, realize that the prices of mansions have reached a low level, therefore, the interest in obtaining the property has renewed. Spring has been characterized by home inspections and the search of the appropriate property, while during the summer period the activities of potential customers have become more meaningful, for instance, the financing opportunities offered by banks for the property acquisition have been considered,” explains the real estate agent of Latio Atis Skrastiņš.
The majority of potential customers in Riga and its surroundings are interested in quality private houses with the area up to 200 square meters. The demand for houses with the area exceeding 250 square meters is low, as such houses have higher upkeep, heating and other maintenance costs. Due to these reasons the prices for large houses, unless these have very good locations, have decreased very quickly.
The offer of mansions is wide, however, only a small part of it meets both quality and price requirements of customers. Currently the number of complete houses on the market with the area suitable for average customers, up to 200 square meters, is insufficient. For average area houses the customers are ready to pay approximately 700 euros per square meter, while the sellers in the majority of cases do not want to reduce the price lower than 1,000 euros per square meter. Within a short time the sellers manage to sell good houses at the prices from 120,000 to 130,000 euros.
Overall, the average prices for mansions have not been decreasing since the end of the last year and have stabilized in the first half of this year. The transaction prices for new or reconstructed mansions with the area of 150 square meters in the residential districts of Riga comprise from 100,000 to 140,000 lats, for earlier constructed – from 85,000 to 105,000 lats. Transaction prices for new or reconstructed houses with similar areas in Mārupe, Babīte, Salaspils, Baloži, Ķekava, Ādaži comprise 80,000 to 110,000 lats, while in Olaine, Salas, Inčukalna areas – from 65,000 to 85,000 lats. Transaction prices for the houses with the area of 150 square meters built in these places in early years are from 55,000 to 75,000 lats and from 40,000 to 55,000 lats respectively.
The prices for the majority of offered houses are either inadequately high for the present market situation, or the prices for the houses that meet the needs of customers, considering the location, infrastructure, area, materials, construction time, quality and other factors, should be considerably less. Furthermore, the offered prices for incomplete houses are often too high, and a potential customer has to consider the additional costs of construction completion. The majority of sellers of new mansions are burdened with loan obligations assumed in previous years;therefore, they cannot reduce the selling price in accordance with the current market situation.
The number of transactions in Riga region this year has remained on the level of the first half of the last year, while in Latvia generally, as well as in Riga and Jūrmala, it has reduced. The number of house transactions carried out through the intermediary of Latio, as compared to the first half of the last year, has increased. This can be explained by the decrease of the number of intermediary service providers and the strengthening of positions of the largest companies in this sector.
Latio
Phone: +371 67032300
E-mail: latio@latio.lv
