We present to your attention a summary of the real estate market situation at the end of 2020.
- Supply and demand balance.
At the beginning of the year, one-bedroom investment apartments, which owners planned to rent on a short-term basis, were in high demand. Shortly after the emergency was announced, interest in them fell sharply, but now, at the beginning of the fourth quarter, demand is gradually recovering.
The average area of apartments sold in Riga's City Center, both at the beginning of the year and in the second and third quarters, ranged from 36-62 sq.m. The highest demand is now for 2-bedroom, 3-bedroom and 4-bedroom apartments.
Most buyers are interested in new projects or reconstructed historic buildings.
Moreover, investors continue to request properties for purchase with the intention to reconstruct them. After construction work is completed, apartments will be sold or rented out, depending on the market situation at that time.
- Transactions in expensive real estate.
In the category of high-quality or luxury real estate, the greatest demand and number of transactions occur in the apartment segment priced at 150,000-350,000 euros. According to the Land Registry statistics for 2020, out of 331 transactions, 305 took place at these prices. Buyer interest in apartments in this price segment (150,000-350,000 euros) extends to both new projects and reconstructed buildings. Typically, buyers look for apartments of 50-120 square meters with one to three bedrooms.
It is worth noting that often the wishes of sellers and buyers-and accordingly, supply and demand-do not coincide. For example, not all potential buyers can acquire the desired property, as they must account for the financing provided by the bank and the valuation of the specific object. This often does not match the price the seller wants to receive: at some point, they invested more in this property and often want to recover that sum.
In the segment of more expensive real estate, priced at 300,000-500,000 euros, clients are more selective and often wait for good offers. In this case, it is easier to negotiate with sellers because there are not many legitimate buyers ready to purchase real estate in this category. Particularly few are willing to purchase at 500,000 euros or more.
- Increased demand for private houses.
This year, transactions with private houses have been a particularly active segment. One real estate company noted that out of ten property presentations, six were related to private houses.
During the pandemic and emergency situation, interest has increased in properties in Mezaparks, Bergi, Marupe and Jurmala, as well as rural properties.
- Statistical indicators.
After sharp changes in March-April and slowdown in virtually all sectors of the economy, Latvia's real estate market recovered quite quickly. If we compare the number of apartment transactions in Riga for the first three quarters of this year with the corresponding period in 2019, it decreased by 16%. However, if we look at each quarter separately, we can see that the biggest decline occurred in April, May and June, whereas both the first and third quarters stayed at 93-98% of the comparable 2019 period.
At the lowest point of this year (in the second quarter), it was noted that the number of transactions fell most significantly in unrepaired old buildings, prefabricated buildings, and in the premium segment. However, in the third quarter, everything returned to normal, and statistical data lagged behind first quarter figures only slightly.
- Buyer behavior.
Buyers always, not just during the pandemic, hope for price reductions. There is a phenomenon known as price offers from buyers. Often buyers think the price is set to allow for negotiation. And now it truly is a buyer's market-they sometimes make bold offers. Nowadays, it is rare when a buyer is guided by their actual budget when searching for housing.
This year there have been discounts; each case is individual, but on more expensive real estate they can be within 10-15%. On the other hand, developers also feel quite comfortable and are not hurrying to lower prices, at least publicly. Perhaps they will be willing to respond to a specific buyer or offer.
In the City Center there are now many new projects. Thus, on one street you can consider several projects and choose the one offering better conditions. Currently, there is positive momentum in demand for new projects where prices are in the range of 2,000-3,000 euros per sq.m. People are interested in them because the market is seeing apartments with optimized layouts that match demand. Overall, the development of new projects has slowed because future demand is unclear.
- Market segment up to 140,000 euros.
The highest demand is for apartments priced at no more than 140,000 euros. Smaller apartments in this price category can be found in the city center, but are mainly located in residential districts. For example, in some reconstructed buildings the average price is around 2,000 euros per sq.m, so smaller apartments fall into this price category. Such properties are chosen as first homes by young families who previously rented. Now they have concluded that from a financial perspective, renting is not as advantageous as buying an apartment.
- Geography of buyers.
Buyers of premium real estate are both local residents and foreigners, including those from European Union countries. However, overall the market is dominated by local buyers. There are non-resident clients for whom residence permits remain relevant.
- Impact of the virus on the real estate market.
Currently, there is no stable external demand on the market, no signs of economic growth, and banking rules have not changed, so sellers are forced to adapt to buyers who have their own legitimate financing with verified sources or bank loans. In the current situation, it is difficult to forecast long-term prospects because everything changes quickly.
According to the Land Registry, September saw the largest number of buy-sell transactions this year.
Perhaps these positive figures were related to the commissioning of many projects and the simultaneous conclusion of purchase-sale agreements. However, buyers are no longer as frightened as they were in spring; they understand that life goes on. Real estate loans continue to be issued (yes, the screening of those who are not provided loans is quite rigorous, but lending continues), interest rates are low, and there is demand because people want to improve their housing and living conditions, especially after prolonged time at home. Therefore, there is currently no basis to speak of falling prices.
Source of information: https://www.varianti.lv/ru/blog/detail/article/6414
If you wish to purchase a quality real estate property, if an individual approach is important to you, if you want to communicate with a real estate agent and lawyer in your native language, then contact our company KOM-INVEST! We will be happy to select a suitable property, answer all your questions, draw your attention to important details, complete the transaction, arrange your residence permit, and manage your property.
For more detailed information on obtaining a residence permit in Latvia, see here in different sections.
Have questions? We await your email or call!
Phone number: +371 29774775
Email: info@kominvest.com
Skype: KOM-INVEST