Despite the usual seasonal slowdown, the housing market started the year with an unexpected surge in buyer interest. The number of available homes has dropped by more than a third, while prices in Riga’s primary market segment for new developments have declined by 6%. Even unrenovated properties, once overlooked due to high construction costs, are now attracting buyers. Market analysts and real estate experts at Latio anticipate above-average activity in the first half of the year, partly driven by changes in capital gains tax, which have prompted buyers to close deals in January. Additionally, expectations of a Euribor decline and overall market stabilization are fuelling forecasts of rising property prices. These trends are highlighted in the latest Home Buyer Confidence Index, while a broader analysis of last year’s developments can be found in the Housing Market Report.

"Home Buyer Confidence Index"* data for January:

• 60 days – on average, it took this long to sell a home at the market price (60 – in December; 61 – in November; 63 – in October; 65 – in September; 65 – in August; 70 – in July);
   
• 13% units were sold within a month following the publication of the advertisement (13% - in December; 12% - in November; 10% – in October; 11% – in September; 12% – in August, 8% – in July);
   
• 14% sellers have asked for unreasonably high prices against the market situation (14% - in December; 15% - in November; 17% – in October; 18% – in September; 17% – in August; 15% – in July);
   
• 65% transactions were conducted without reliance on borrowing (65% - in December; 66% - in November 66% – in October; 64% – in September; 61% – in August; 59% – in July);
   
• 36 000 EUR – the median of gross transaction value** (33 000 – in November; 34 000 – in October; 33 400 – in September; 30 500 – in August; 30 000 – in July);
   
• 20% transactions*** in Riga involved units in new developments (22% - in November; 19% – in September; 16% – in August; 16% – in July; 22% – in June; 21% – in May).

Although January started with moderate activity in Riga's housing market, the second half of the month saw a noticeable increase in demand. The number of apartments available for purchase dropped by more than 33%, reaching 3,280 units, while the supply of rental apartments decreased to 2,430 - a 19% decline compared to December. Nearly 40% of properties available for purchase and 77% of rental listings consisted of units in Riga’s Soviet-era housing projects. Prices in this segment remained stable, with the cost per square metre in these buildings averaging 1,010 EUR in Riga’s neighbourhoods and 1,410 EUR in the city centre.

According to market data compiled by Latio, for the first time in a long period, the supply of apartments in new developments has exceeded the availability of units in Soviet-era buildings across Riga’s neighbourhoods. In January, 1,570 apartments were available for purchase in the primary market, accounting for 48% of all properties for sale. However, this shift is primarily due to a decline in the number of Soviet-era apartments on the market rather than a significant increase in new project developments. Compared to the end of last year, asking prices for new developments have risen by nearly 3%, reaching 2,850 EUR per square metre. However, actual transaction prices have shown a 6% decrease, bringing the average price per square metre down to 2,610 EUR. A similar trend is observed in the secondary market for new developments, where average prices in neighbourhoods fell by 5% to 1,950 EUR per square metre, while in Riga’s city centre, they increased by nearly 2%, reaching 3,070 EUR per square metre.

According to Latio real estate agents, January brought a wave of positive momentum to the housing market, continuing the activity observed in the second half of last year. The average time required to sell a property at a market-appropriate price has decreased to two months, compared to 78 days during the same period last year. Additionally, the share of sellers listing properties at unreasonably high prices has dropped from 22% last year to 14% in January, indicating a greater alignment with actual market conditions.

While buyer interest continues to favour high-quality, move-in-ready properties, demand for unrenovated apartments is gradually returning due to their more affordable prices. There has also been a growing interest in private houses and residential development plots in Riga Agglomeration, including larger properties - an unusual trend for winter, typically more characteristic of the spring market. At the same time, market momentum is being slowed by a limited supply, creating a situation where liquid properties quickly find buyers, while less attractive listings remain on the market with less attention from potential buyers. Real estate agents also highlight the relatively high supply in the rental market, alongside increasing interest in refinancing options.

Buyers' favorites – Āgenskalns, Mežaparks, Latgale

Last year, a total of 2,651 transactions were completed in new residential projects across Riga. Among the capital's most prestigious neighborhoods, the project with the highest number of transactions was Moho Park, where 68 apartments were purchased at an average price of 3010 EUR/m² for indoor space.

On the right bank of the Daugava, the leading project was Krasta kvartāls, with 70 transactions at an average price of 2720 EUR/m², followed by Silvas nami in Purvciems, where 66 apartments were sold at an average price of 2470 EUR/m², and Ābeļziedu terases in Teika, where 44 homes were purchased at an average price of 3220 EUR/m².

Meanwhile, in Pārdaugava, the undisputed leader was Mārpagalmi in Āgenskalns, with 93 apartment transactions completed last year at an average price of 2750 EUR/m². Followed by Pīlādžu mājas in Ziepniekkalns, where buyers acquired 60 apartments at an average price of 2340 EUR/m², and Raņķa dambis 31, with 32 transactions at an average price of 1480 EUR/m².

Rise in Cash Transactions

A significant trend has emerged in Latvia’s housing market - an increasing number of buyers are purchasing properties without bank financing. Most transactions are being completed using buyers’ personal savings or with minimal reliance on mortgage loans. In January, cash transactions accounted for 45% of all deals, rising to 66% by the end of the year. These self-financed purchases primarily involve apartments, small private houses, and rural properties valued at up to 100,000 EUR. Despite the European Central Bank's multiple decisions in 2024 to gradually lower Euribor rates, this has not significantly influenced buyer behaviour. Instead, people have become more critical in assessing their financing options, preferring to complete transactions using their own funds whenever possible.

In Latvia’s regions, so-called small housing loans (consumer loans) of up to 20,000 EUR remain a popular financing option, often serving as the only way to purchase property due to banks’ limited mortgage lending outside Riga. Commenting on this trend, Latio Business Development Manager in Latgale, Jānis Sprindžuks, noted:

“The main factors restricting lending are high costs and residents’ purchasing power, rather than Euribor, which plays a relatively minor role. Due to the rising cost of living, people can afford less than they could before the war in Ukraine. Currently, market activity is driven by buyers aged 30 to 45, who predominantly seek move-in-ready homes that require minimal investment. This preference is not just a matter of wanting modern, well-maintained properties - a trend seen across all of Latvia, not just in Riga - but also stems from a shortage of skilled construction workers. Despite construction costs reaching nearly “unreasonable” levels, property quality has not kept pace.”

Similar trends have also been observed in Kurzeme:

“Buyers were reluctant to consider houses requiring renovation, as the high prices and increased construction costs made these properties less attractive. However, if a serious buyer emerged, sellers were willing to reduce the price,” said Uldis Leja, Latio real estate valuer.

Latvia's construction volumes lag behind neighbouring countries

Despite construction costs rising across the Baltics last year, the pace of new building projects in Latvia is much slower than in Lithuania and Estonia. While construction volumes in all three countries were similar in 2011, over the past three years, Latvia has failed to keep up with the growth seen in its neighbours, who have experienced faster development. This is partly due to the country's legislation and bureaucracy; in Latvia, it takes more than six months to obtain a building permit, while in Lithuania and Estonia, it can be secured within two to three months. Latvia also ranks high in costs, with obtaining a building permit for developers accounting for 0.4% of the total construction value.

High costs and legislative shortcomings are also slowing the development of new projects in Latvia’s regions, where supply cannot meet demand. There is particularly strong interest in new projects in Liepāja, Jelgava, and Valmiera. However, the shortage of brand-new homes has not halted the market - buyers in the most sought-after locations are willing to purchase lower-quality properties. For example, in Liepāja, the number of transactions has steadily increased since 2022, driven by attractive housing prices that, according to Latio estimates, have decreased by 12% over the past year. In Valmiera, while transaction and housing prices have not significantly changed, there has been a notable increase in potential buyers’ confidence in their purchasing ability.

“At the beginning of the year, there was a growing supply in the apartment and private house segments, with the number of listings nearly doubling. However, this increase did not cause actual market prices to drop, which would have been beneficial for buyers. The market also saw homes built in the past 10 years coming up for sale. In the apartment segment, two- and three-bedroom apartments were the most sought after, particularly those that had recently undergone interior and technical renovations. Private homes ranging from 100 to 120 m² in good technical condition were also in demand,” said Daiga Blumberga, Latio Business Development Manager in Vidzeme, describing the market in Valmiera.

* 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.

** All transactions for apartments and private houses in Latvia in December

*** Data on transactions registered in the Land Registry in December

Additional information:

Dr. oec. Ksenija Ijevleva
Market Analyst
E-mail: ksenija.ijevleva@latio.lv
Mob. +371 26814932