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The Latvian real estate market is cooling amid high loan rates

25.01.2024
Homesoverseas.ru editorial office
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In Latvia, after a sharp increase in housing sales a year ago, there was a pause in the market at the beginning of 2024. For the most part, it is related to uncertainty about the future of interest rates.

At the end of 2023, 3,090 apartments were sold in Riga, which is 9% less than a month earlier, the real estate company Latio reported. Elina Duce, head of the company's sales department, said that due to the sharp increase in interest rates on loans last year, the market was convinced that renting a house in Riga is more profitable than buying it with a mortgage loan. "Now people are renting an apartment rather than deciding on a loan, plus some people's financial situation is not such as to take out a loan right now, and some banks may refuse. The rental market was indeed quite active in the fourth quarter of last year," Duce said.

As for purchases, this year began with a surprise: "already in the first week, people call, are actively interested and want to buy," and about 40-42% of interested people buy real estate without a loan, Duce noted.

According to Latio, a year ago, only 30% of home buyers went without loans, so we can conclude that interest in loans has decreased, although perhaps it is only beginning to grow, since the loan rate has stopped rising and it is expected to decrease in the future.

Meanwhile, Arco Real Estate board member Maris Laucaleis said that after the growth of the market at the beginning of last year, its activity has fallen sharply today, especially in the segment of new housing. "Our explanation is that prices in new buildings and in the segment of private houses are significantly higher, on average from 150,000 to 200,000 euros and above. And here, obviously, the impact of the rate is very large, despite the fact that it is not so significant in the segment of mass housing. Thus, the mass housing market is arguably more active than in previous years because people are looking more at what they can afford in this situation," Laucaleis said.

Source: Eng.LSM

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