Since the activation of the real estate market in the middle of last year, there has been an increase in housing prices, and the residents of the Baltic Countries have also been concerned about this. The results of Luminor Bank survey* show that slightly less than half of the population of Latvia, Lithuania and Estonia expect real estate prices to rise up to 10% in the coming year.
Such a price increase is expected by 54% of the population in Estonia, and 44% in Latvia and Lithuania. Furthermore, about 12% of the Baltic population believe that prices will rise even sharper. In Latvia, the residents of Riga and Pieriga are most concerned about the rise in prices.
“The rise in housing prices takes place not only in the Baltics, but across the Euro Zone. Not only property prices and the demand are rising, also the number of concluded transactions is growing,”
says Kaspars Lukačovs, Head of Luminor Retail Lending department in the Baltics.
“As the most active real estate market is in the vicinity of the capital city, where most transactions take place, the residents of Riga and Pieriga feel the rise in prices the most, and they forecast the further rise in the future as well. However, prices are also growing in the most developed economic centres elsewhere in Latvia, e.g. Liepaja, Dobele, etc. In Valmiera, for example, the level of housing prices is already approaching the prices in Riga.”
According to the Bank, currently the greatest demand is for two- to three-room apartments in new projects with an area of 50 to 70 square meters. Customers want to buy larger housing to furnish also a work space there, but some, especially families with children, move out of Riga.
As explained by Evija Dzenīte, Head of the Housing Sales Department of the real estate company Latio, the demand currently exceeds the supply:
“It may happen that several buyers target the same housing, and they may have to compete for it. People are looking for ready-made, modern and well-equipped housing, while the demand for unrenovated apartments is becoming less and less. Currently, the average price for standard-type apartments, depending on the location of the building, is about EUR 800 to 1000 per square meter, but for new projects EUR 1800 to 4000.”
The population survey shows that in Lithuania more people than in Latvia and Estonia believe that prices will not rise or they will even decrease. In Lithuania, such an answer was given by 23% of respondents, while in Latvia by 14% and in Estonia by 13%.
“According to the bank’s survey, about a third of the Baltic population is currently considering buying a housing and, although part of the population expects prices to fall, they are likely to continue to rise due to high demand and rising prices of construction materials, so the situation is not expected to change in the near future,”
explains K. Lukačovs.
“At the moment, we recommend the purchase of housing to those who have the adequate income and savings to make the down-payment and who really need it.”
*The survey was conducted in September 2021 in cooperation with the research centre Norstat, surveying more than 1000 people aged 25-55 in each of the Baltic Countries.