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"Over the past ten years, the Latvian real estate market has developed steadily, without excess, and it would be premature to talk about an overheating market at the moment." The average price of apartments in Riga, although growing, is currently 25% to 30% lower than the highest point before the crisis, or 1,027 euros per square meter average ", note Swedbank Mortgage Director, Normunds Ducis.
"The activity is also less important than at that time and people are more cautious about the possibilities of buying a home and borrowing." Significantly, the greatest caution is currently observed in Latvia, where the real estate market is growing slower than in Lithuania and Estonia.In comparison, in Vilnius, the average price per square meter reached 1,488 euros this year, against 1,746 euros in Tallinn, but five years ago, the average price in both countries was 1,100 euros per square meter.The rise in prices in neighboring countries was facilitated by the relatively strong demand for new housing. Real estate in Latvia is the most affordable of the Baltic countries, as wage growth in America exceeds that of real estate prices, "commented Mr Dūcis.
"If we compare the Latvian economy this year and ten years ago, it can be said that it is currently based on more durable" legs ", although overall construction has been very rapid over the last two years. In recent years, its contribution to the economy has increased from around 9% ten years ago to 5% last year, for example, in 2007, investment in all types of buildings rose to around 3%, 5 billion euros, but last year, they were only 2.3 billion, about a third less.In addition, the job market is less dependent on the l & # 39; If in 2008, 12% of all workers or 124,000 were working in construction, the construction industry this year employs about 73,000 people, or about 8% of employees. the importance of the construction sector in the Latvian economy has decreased, given the current situation of e the Latvian economy, it would be exaggerated to talk about the repetition of history and economic shocks could rather be caused by external rather than internal risks, said Swedbank economist Linda Vildava.
Demand for new housing exists only in the affordable price segment. The situation explains the real estate developer Bonavia Latvia Chairman of the Board, Mareks Klavins, said: "We are finding that the buying power of the population is increasing, but that the qualitative supply in the market is inadequate. the Latvian population lives in housing built during the years of independence.Most housing, or 75% of housing, was built during the Soviet era.The people of Riga need new housing, the Housing stock needs to be restored – old homes do not stay younger, so we see good potential for real estate growth in the future by providing housing for new projects accessible to a wide range of people. "
Waiting Swedbank data from the survey shows. residents' views on recent developments in the real estate market are ambiguous. A fifth think the market is likely to stagnate, while the same percentage goes in the opposite direction and thinks the market is growing very quickly and overheating. A fifth (17%) believe that the real estate market is growing steadily and at a reasonable pace. In general, according to the population, the real estate market is currently characterized by price increases in certain segments (29%) and by an insufficient quality offer in the regions (27%). At the same time, the desire of the population to buy a home increases every year and, over the next two years, 15% of the workforce considers such an opinion.
This year, citizens' confidence in their finances has increased dramatically, as has the sense of real estate prices and more affordable credits. More than half of the population planning to buy a home in the next two periods indicates that housing prices are currently available (56%, an increase of 8% over the previous year) and continued confidence in the future (53%, up 11% from the previous year). with last year). In addition, one third is in favor of wage growth (32%, increase of 24%), a sufficient provision for the first payment (32%) and low interest rates (28%, up 8%).
Although housing prices have become more affordable for citizens over the past year, they still remain high and are the main reason for postponing the purchase of a home. At present, 63% of the population postpones the decision to buy a house because it thinks that real estate prices are high. Part of the obstacle is the lack of a first payment (27%), but the proportion of these residents has significantly decreased during the year (by 18%). However, dissatisfaction with the offer also increased: it did not meet buyers' expectations (26% of respondents, an increase of 8%).
Significantly, this year, the number of people delaying the purchase of goods in the hope of falling prices in the near future has almost quadrupled (such forecasts represent 15% of the population), but, as said the banking expert, we must not stick to this scenario. "People are now borrowing much more responsibility and making more thoughtful purchases, so the situation where the standard price of an apartment exceeds 2,000 euros per square meter is no longer possible. At the same time, the Latvian real estate market is "alive" New housing and commercial space, purchase and rental rates for buildings are rising, and construction prices are rising, minimum price per square meter in which real estate developers have the opportunity to sell housing. "
If citizens had the opportunity to choose where and for what property to buy, 36% would buy a private house in one of Latvia's regions, while 26% would buy a private house in Riga or Pieriga.
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