The Land Register has published transaction statistics for the past year, so we can draw conclusions.
The past year proved quite successful for the Latvian real estate market - 52,752 properties changed owners.
This is 6.6% less than a year earlier, but it is worth noting - in 2021 we saw the highest buyer activity over the last decade.
A slight decline against this background does not look dramatic. Given extraordinary factors (inflation, rising credit rates), the situation is even positive.
All real estate transactions in Latvia are registered at Land Register offices. Following recent reforms, we can speak of seven major entities where all information flows: the Land Register of the Vidzeme Suburb Court of Riga, which accumulates data from the capital's real estate market, the Land Register of the Riga District Court - the capital's surrounding areas (where most private houses are located), and also the Land Registers of the Zemgale District Court, Vidzeme District Court, Daugavpils Court, and Rezekne Court.
As already mentioned, purchase agreement registration statistics in 2022 were worse than in 2021. But at the same time, they were better than in pre-pandemic 2019, when the real estate market last operated under natural conditions, without the influence of such global external factors as pandemic or war.
Let us turn to the figures. The overall statistics of real estate buy-sell transactions in Latvia over the past four years are as follows: in 2022, 52,752 properties changed owners (minus 6.6% compared to 2021), in 2021 - 56,502 (+11.1%), in 2020 - 50,839 (+1.9%), and in 2019 - 49,890 (+1.6%). That is, if we compare last year with "pre-pandemic" 2019, we see an increase in the number of transactions of 5.7%.
It is also interesting to analyze how many transactions were conducted with bank loans. This is 24,561 transactions. Consequently, 46.6% of all transactions in Latvia last year involved mortgage loans. In this regard, there have been no significant changes: this is slightly below the figure recorded in 2019, which was 47.6%.
Riga remains the most active region in Latvia for real estate transactions. Last year, 15,104 different real estate properties were purchased in Riga. This is slightly less than 3.5% lower than in 2021 (15,645 sales), and almost 10% higher than in 2020 (13,734), and 0.8% higher than in 2019 (14,982).
As for the credit component in capital purchases, last year the judges of the Riga Land Register recorded 9,434 new applications for credit agreements registration, which constitutes 62.5% of the number of sales. This is almost identical to the 2019 result of 62.7%.
An interesting observation - compared to the "pandemic period," when private houses were in high demand, last year the number of such transactions decreased. If in 2021 the Riga District Court Land Register recorded 10,122 transactions, then last year it was 8,646. This is 14.6% less. However, even here, against the backdrop of 2020 and 2019 figures (8,513 and 8,107 purchase agreements respectively), the picture is quite positive - +1.6% and +6.6%.
In addition to statistics, we share observations from Latio real estate company.
- The real estate market situation is changing. If in summer 2022 we observed a "seller's market," when supply was low and prices were rising, now potential buyers have taken the initiative. Given high utility payments and increased credit interest rates, buyers are carefully selecting purchase options and analyzing maintenance costs. Therefore, large apartments and apartments with irrational layouts are not in demand.
- The number of investor-buyers has also decreased. Purchasing real estate for rent comes with risks. If an apartment sits vacant or requires expenses (while waiting to find a tenant), this is unprofitable.
- The time needed to sell a property at market value has increased. On average, this is 80 days.
- The market sees many buyers who purchase real estate without bank financing. In some cases, it is more profitable to pay the full amount at once than to overpay the bank in interest. This is also a way to protect your money from inflation.
- At the end of 2022, several new projects were commissioned. Therefore, 1,400 new apartments are currently available, which is 60% more than in January of last year. At the same time, it is precisely this modern and energy-efficient housing that enjoys the greatest demand.
- The average price per square meter in new buildings reaches approximately 2,600 euros per square meter.
- The average price in standard apartment buildings is 1,050 euros per square meter.
- The number of rental options has decreased. A possible reason is that due to high prices, many families are postponing purchases and prefer to rent housing for some time.
- Bank policy has become stricter. For example, if an unrenovated apartment is being purchased, the bank may request not only an estimate (to understand renovation costs) but also confirmation from the buyer (i.e., the borrower) that they have sufficient funds for renovation.
- In the private house segment, there is consistently high demand for modern houses in the Riga suburbs with economical and efficient heating sources.
- As a conclusion, advice for buyers - if you plan to purchase housing on credit, everything needs to be calculated with a margin. The credit payment may increase. Utility payments can also rise. And even everyday expenses (for example, grocery purchases) can increase. Families should plan their budgets very carefully.
Our company KOM-INVEST also monitors the market and covers current trends!
Sources:
https://www.city24.lv/real-estate-news-story/18388/pern-majoklu-tirgus-piedzivojis-butiskas-parmainas-bumba-sobrid-ir-pirceju-puse
https://www.varianti.lv/ru/blog/detail/article/8878
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