As is well known, the real estate market depends on supply, demand, and the sentiment of its participants.
In September 2020, one of Latvia's largest banks (SEB banka) surveyed more than a thousand clients.
Approximately 44% of respondents expect real estate prices to rise over the next 12 months.
For comparison, this figure was lower in March (39%).
Another 28% of respondents believe prices will remain unchanged. Thus, more than half of respondents have faith in the Latvian real estate market.
This optimistic sentiment is explained by the fact that the Latvian economy is "doing well". Undoubtedly, many sectors have suffered from COVID.
However, there are government support measures in place, and some sectors are actually growing (construction, information technology).
It is worth noting that local residents can obtain mortgages on very favorable terms.
Interestingly, did the September forecasts come true?
The following months (October, November, December) were challenging. The country introduced numerous restrictions and declared a state of emergency.
Despite this, real estate transaction statistics show that December buyer activity was the highest not only in 2020, but also over the past six and a half years-since August 2014.
However, the trends are markedly different. The "surge" in August 2014 was caused by changes in the residence permit program. That summer, in certain segments, more than 50% of buyers were foreigners.
In December 2020, foreign buyers accounted for only 1-2% of all transactions.
According to some experts, the December "surge" in sales is explained by the fact that many budget-class projects were simultaneously put into operation, and deals that had been initiated during the construction phase one to one and a half years earlier were completed.
It is also important that local buyers now find it somewhat easier to enter into transactions than when the market is flooded with non-residents. Local buyers understand that prices correspond to the quality of housing and there is no point in delaying the purchase. It is clear that in summer or autumn 2021, borders will open, non-resident buyers will appear, and prices will begin to rise.
Moreover, even now, in the affordable housing segment, demand exceeds supply.
The real estate market in the Riga district is also "doing wonderfully". In December, 866 purchase agreements were registered here. This is the second highest monthly figure in 2020.
The last month of the year was particularly successful for Jurmala-155 purchase agreements. This is the best monthly figure in 2020, as well as in 2019 and 2018.
So the pent-up demand caused by the pandemic is working.
What conclusions can we draw?
In our opinion, the pandemic shows that much in our lives is unstable. Large businesses, particularly those related to tourism, transportation, and food service, have faltered or come to a standstill. From an investment perspective, it is difficult to forecast anything on the stock market.
Purchasing commercial real estate would not be the best decision-demand for retail or office space is unclear. Against this backdrop, residential real estate, especially in the mass market segment, is a very understandable asset for saving or investing money. Quality housing will always be in demand, even in the most difficult times. An apartment or house can be insured.
It is a very clear, tangible, and reliable asset. For this reason, many purchase real estate for themselves or for rental income.
We can confidently recommend that you invest in Latvian real estate!
If you wish to purchase any quality real estate property, if individual approach is important to you, if you want to communicate with a realtor 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 nuances, arrange the transaction, process your residence permit, and manage your property.
For more detailed information about obtaining a residence permit in Latvia, see here in various sections.
Have questions? We look forward to your letter or call!
Phone number: +371 29774775
Email: info@kominvest.com