
In 2025 year the real estate market of Latvia will come out of stagnation thanks to the reduction of Euribor, beginning in the last year, predicts the manager of the Building Company and developer SIA YIT Latvija Andris God. He expects that in 2025 the number of new apartments sold in Latvia will increase, including properties with large places. But this could cause a deficit of finished apartments, as demand for new projects exceeds supply.In December the Euribor rate was reduced by 0.25 percentage points, and it is expected
to continue decreasing to reach a level below 2% by the summer. In the words God, in the period when the Euribor rate rose rapidly, buyers of new apartments focused on more compact and economical housing, but now on the background of decreasing rates there is increased
interest in more spacious apartments. Also, the reduction of the rate on mortgage loans is making the purchase of housing more attractive. He noted, that income growth,
low inflation and acceptable prices for energy are creating confidence in people that the prices have been increasing, that they can invest in purchasing new apartments. “Now is a very beneficial time to buy housing, as interest rates continue to decrease, and there are plenty of completed new energy efficient apartments. It is worth considering that the prices for housing in Latvia are substantially lower
than in Vilnius or Tallin. In addition, buyers can receive different bonuses from sellers, which makes purchasing an apartment more profitable than renting, ” God added. Today there are about 1,500 1500 comfort-class apartments available in Riga ,many of which are in the projects in the South area, but the number of new projects in the construction stage is limited. Because of this there is a fear that as early as 2025 the supply of quality housing could decrease. According to predictions, in
Riga should be available from 2500 to 3000 apartments, but the current supply could be completely consumed already in the next six months. God also noted that, with the increasing demand, by the end of the year, the market could have a deficit of prepared apartments. “Uncertainty in the economy, caused
by rapid growth inflation and the consequences of the war in Ukraine, and also high prices for energy resources, substantially affected the real estate market, which led to the suspension of a number of investment projects”, he explained. “Now, when the situation stabilized, the developers resume their activities, but the supply in the market is not restored so quickly, as we would would like, because the construction of new homes is a process, which takes a few years. It is not like producing new screws that can be sent tomorrow to a store and sold. Demand is recovering
faster than the developers have time to design and build new projects. We also plan to resume construction of our projects in the Agenskalns, Dreilini, Plavnieki and
Zolitude, which were suspended for some time, but, seeing the interest in the already available apartments, it can say that the market is recovering,” the expert added. “As for measures to accelerate the development of projects, God stressed that developers should have enoughfinancial resources for the realization of construction, and also for simultaneous work on numerous projects. “In Latvia the project is commissioned, subdivided into apartments, registered in the Land only after that the developer can receive money, which are 85-90% of the total sum deal, so the developer receives the funds for the sold apartments only after the closing of the project. What to do further? I think we should learn from Poland, where the open escrow account is created, that is If people buy apartments at the time of construction, the developer receives funds immediately from
thebanks.InLatviathere is no such thing.A similarmodelisusedinCzech Republic,whereit is possibletoregistertheapartmentintheLandBookafterthecompletionofthemainconstructionwork,andthedeveloperreceivesfrombanksthemoneyforworkperformedonthemortgageagreementsofclients.In addition, inCzech RepublicreducedtherateofVATintheamountof12%fornewapartmentsoftheeconomy class,whichsignificantlyincreasesaffordabilityofhousingandsignificantlystimulatesthemarket,saysGod.”