The pace of transactions has slowed down noticeably in August due to the holidays. There is also no rush on the sellers' side, with owners adding new listings to the market less frequently. As Latio Real Estate agents have observed, the Euribor factor is playing a less and less important role among home buyers. As people have adapted to the market situation, they have also accepted property prices and are more realistic about the mortgage options available to them - especially for amounts up to EUR 100 000. At the same time, buyers continue to take thoughtful pauses before deciding to buy - especially those considering new projects. Traditionally, August also sets the rental market in motion as students look for accommodation for the new academic year, and this year has been no exception.

“Home Buyer Confidence Index”* data for August:

• 65 days – on average, it took this long to sell a home at the market price (70 – in July; 70 – in June; 75 – in May; 75 – in April; 76 – in March; 76 – in February);

• 12% of housing units were sold within one month of advertisement publication (8% - in July; 9% - in June; 9% - in May; 9% - in April; 9% - in March; 9% - in February);

• 17% of sellers have asked for a disproportionately high price for the market situation (in July – 15%; in June – 17%; in May – 18%; in April – 19%; in March – 21%; in February - 22%);

• 61% of transactions were conducted without reliance on borrowing (in July  - 59%; in June – 52%; in May – 55%; in April - 53%; in March – 50%; in February – 46%);

• 15%** - it is currently more profitable to rent than to buy a home (in July -10%; in June 4%; in May 11%; in April 11%; in March 18%; in February 14%). Currently it is more profitable to rent.

• 21% of transactions*** in Riga happened with housing in new projects (in June – 26%; in May – 24%; in April – 26%; in March – 26%; in February – 30%).

In August, the supply of apartments available for purchase in Riga increased by around 13% - 5365 apartments were available for sale. The most active is the series-type housing market, where both transactions are taking place and the number of advertisements is growing - in August, almost half or 2370 of the total number of homes available for purchase was in series-type buildings in the capital's neighbourhoods. The number of housing units available for rent in Riga increased by almost 11% to over 2500. Based on "Latio" experts' calculations, in August renting a two-room apartment in a new project in the most sought-after neighbourhoods of Riga was 15% more profitable than buying it with a mortgage loan for 25 years, thus renting a home has become financially more favourable again. More than a third or 36% were rental apartments in series-type buildings in Riga's neighbourhoods. The average price of indoor space in standard buildings has risen insignificantly - in the neighbourhoods the average price per square metre is EUR 1040 (+2.5%), in the Centre - EUR 1520 (+1%).

The supply of new projects on the primary market fell by 1.5 percent during the month (1390 apartments). Housing in new projects accounted for 26% of the total supply of apartments in Riga in August. Average prices for indoor space remained unchanged at 2800 EUR / m² in sales listings and 2720 EUR / m² in transactions. The price increase was recorded in the secondary market of new projects in the neighbourhoods, where the average price per square metre of indoor space was EUR 2030 (+2.5%), while in the centre of Riga the average price decreased by almost 6% (2330 EUR / m²). "Latio" experts conclude that transactions in the new projects segment take place when the buyer finds the price offered by the developer appropriate for the market or the bonuses offered are attractive enough.

Compared to other years, the share of buyers who buy with their own funds and need a bank loan to cover only part of the purchase price has increased significantly this summer. Most of these transactions are for up to EUR 60 000 for a housing unit in a series-type projects. Given the advantage of buying a property with their own financing, potential buyers are actively bargaining and exploring different options without rushing into a decision. The price reduction desired by buyers is often in the range of 20-30%, but it is rare to negotiate such a large percentage "discount" with owners.

In response to the demand for new and modern housing also outside Riga, several new projects are under construction in Jelgava and its surroundings with a price per square metre ranging from EUR 1700 to 2000, including full finishing and sanitary fittings. In this price category, interest is relatively high - in one project with a total of 34 apartments, more than a third have already been sold or reserved. The supply of new projects outside Riga is stirring interest among buyers who are also looking for a home in the capital. Compared to prices in the centre, a home in a new project in the Riga Agglomeration area or even further away from it is often a more affordable purchase, especially if the area has well-developed infrastructure, public transport connections to Riga and the buyer does not feel physically "disconnected" from everyday life in the city.

On the other hand, in the private house segment: potential buyers are "raising" their price ceilings, as the supply of properties within the initial desired budget is very limited. Most of them are interested in finished private houses with at least three bedrooms and up to 130 m², which will not require large investments in the coming years. Owners of detached houses mainly agree to talk about price reductions in the range of 5-8%. Similarly, in August and summer there was unusually low interest in plots for private development, especially in the Riga Agglomeration area. As there are no indications that construction costs would fall in the near future, people prefer to look for completed private houses but are faced with very low supply. Potential buyers of private houses are also supplemented by those who initially looked in the direction of new projects.

"Talking to potential buyers who have considered buying a family apartment with at least three bedrooms in the new projects, there is a trend that people are starting to question the reasonableness of the prices of the new projects. If the price per square metre in a project exceeds 2400 EUR, buyers start to reconsider their options and most often choose either a qualitatively renovated dwelling in a series-type projects or switch to buying a private house," says Janeta Linkuna, Real Estate Agent at "Latio".

The rental market has become hotter in August, with students and employees returning to Riga at the end of summer in search of accommodation. This trend is also observed in other student cities, especially in Jelgava, where in August there was a high demand from foreign students, while the supply of properties available for rent was very low. For quality housing with reasonable market-rate monthly rents, owners have been able to choose their preferred tenant.

Overall, the first half of the year in the housing segment was relatively unchanged compared to the same period last year. Transactions totalling EUR 537.5 million were carried out, but the total number of transactions exceeded 10 600.**** From January to July, more than 9 000 transactions with apartments were concluded in Latvia. Almost half of them took place in Riga, 12% in Kurzeme and the Riga Agglomeration area, 11% in Latgale, 10% in Zemgale and 6% in Vidzeme. Most transactions took place with two-room (44%) and one-room apartments (26%). More than 70% of transactions were for dwellings in buildings constructed between 1959 and 1999 and only 13% in new projects built between 2000 and 2021. In Riga, the majority of transactions were registered for apartments in the right bank districts of the capital - Purvciems, Ķengarags and Pļavnieki, with an average price of 1010 EUR/m² (-4% compared to the first half of last year).

In the first six months of this year, the most sold apartments in the primary market of new projects were in the project "Mārpagalmi" in Āgenskalns (61) at an average price of 2760 EUR / m², in the project "Moho Park" in Mežaparks (58) at 2980 EUR / m² and in the project "Pīlādžu mājas" in Ziepniekkalns (43) at an average price of 2360 EUR / m². Overall, 37% of transactions in the new projects segment took place on the secondary market, 36% on the primary market, and just over a tenth of transactions in both the primary and secondary markets for renovated projects.

* For residents to be better informed about the current situation in the real estate market, “Latio” publishes the “Home Buyer Confidence Index” on a monthly basis, summarizing the six most descriptive indicators of the market situation over the past month.

** The index is calculated by comparing the potential average monthly mortgage loan payment with a loan term of 25 years in the new projects of two-room apartments with an area of 40-60 m² with the average rental price advertised in August in one of the most sought-after neighbourhoods of Riga.

*** Data on transactions registered in the Land Register in August.

**** All transactions in apartments and private houses from January to May 2024 (inclusive).

Additional information:

Rūta Roze
Latio | Market Analyst
E-mail:  ruta.roze@latio.lv
Mob. +371 29219357