In the last couple of months the housing market situation has been akin to a movie at half speed, said Latio market analyst Dr. oec. Ksenija Ijevleva about the situation in Latvia.
Deals are taking place, but the rate differs across different market segments. Buyers and sellers each hope for changes in price correlations in their favour – sellers hope for growth, buyers hope for a drop. However, no major fluctuations have been observed as of yet – even in December, when the majority received bills for November and considered their future costs.
In its Home Buyers’ Confidence Index, Latio compiles five indexes that describe the situation observed in the market last month. The biggest novelties observed in December include the increase of buyers that invested their free finances into real estate in hopes of avoiding consequences of inflation. (Estimates in the index were done based on data submitted for various deals.)
Here is the data of the index for December 2022: 70 days was the average time necessary to sell a dwelling for market price (61 in November; 45 in October; 36 in September; 32 in August; 28 in July); 5% of dwellings were sold within one month’s time after publication of a sale offer (5% in November; 8% in October; 12% in September; 14% in August; 16% in July).
52% of sellers requested an unreasonably high price (51% in November; 55% in October; 58% in September; 63% in August; 60% in July).
1% of buyers offered prices higher than the prices listed in offers (1% in November; 2% in October; 2% in September; 4% in August; 7% in July). 29% of deals were carried out without using loans (28% in November; 26% in October; 26% in September; 26% in August; 24% in July).
In December the housing market could be described as in waiting – without any major fluctuations in directions favourable to sellers or buyers.
At the same time, the market did not stop. There are still good objects on offer with modern finish and no need for additional investments. These pieces of real estate are generally sold within a month’s time, even if located in standard buildings.
Real estate pieces that are outdated and not compliant with modern requirements generally do not receive many or any calls without price reduction.
This means the average number of days it takes to sell such pieces of real estate already reaches 70. Analysis of data from the index shows that there have not been any major fluctuations for buyers’ will to offer higher than requested prices – such indications were observed for only 1% of deals. There have also been no signs of sellers’ growing ambitions to request unreasonably high prices – similarly to before, this was observed for 52% of deals.
Looking at data for December in regards to new project offers, it becomes clear that in Riga prices of this segment have increased by an average of 15% since Q1 2021. While in Q1 2022 the average price in this segment was 2 780 EUR/m2, the price now reaches 3 200 EUR/m2 (3 330 EUR/m2 in offers). In Riga’s neighbourhoods the increase was an average of 7% and the average price in deals performed in December was 2 150 EUR/m2 (2 450 EUR/m2 in offers).
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