Although the prices of housing under construction in Riga have increased by 29% over the course of the year, they remain lower than prices in Vilnius and Tallinn, according to information from Colliers real estate advisory company’s real estate company Ober House Real Estate Advisors Lithuanian branch and Estonia’s Land Council regarding real estate deals in the new housing segment.
Additionally, with housing purchase costs up, the behaviour of buyers has changed – people mostly purchase compact and functional apartments, which is confirmed by observations from housing development company Bonava Latvija.
According to data from Colliers, in April 2022 the first-hand market in Riga and Pieriga registered only 140 new apartment purchases, which is 35% less than the average observed in the last 12 months. Entry of new projects was not observed on the market. This had previously negatively influenced the first-hand market activity, especially considering the low availability of finished new apartments on the market.
In April the total number of finished apartments available on the market was approximately 1 000 or 130 apartments fewer when compared to March.
As for the prices of newly commissioned apartment deals, 1 m2 in such apartments cost an average of EUR 2 2000, which is 7% more than year prior, when the price was only EUR 2 065 per 1 m2. The biggest price increase for finished apartments was observed in Pieriga, where prices have increased 30% in the past year. This can be explained with better locations of new projects, such as Mārupe, and bigger influence prices, considering increased construction costs.
Inflation and construction costs caused prices of apartments under construction even more quickly. «While the average price of apartments under construction reached an average of 2 250 EUR/m2 in March, by April the price had already reached an average of 2 350 EUR/m2. This is 29% more than a year prior, when the price was an average of 1 825 EUR/m2,» notes Colliers study and advisory department’s associated director Agija Vērdiņa.
However, in spite of the price growth, the cost of apartments under construction in Riga remain below those in Vilnius and Tallinn. According to data for April from Ober House Real Estate Advisors in Lithuania, the price of purchase deals for apartments under construction in Vilnius was around 2 368 EUR/m2 in April. It should be mentioned here that in Lithuania new housing is generally sold with grey finish. This means housing prices with full finish is a couple of hundred euros higher. In Tallinn deals on the first-hand market’s new apartment segment in April were done for amounts an average of 3 510 EUR/m2, according to information from Estonia’s Land Council. The council does not, however, separate prices of finished housing and housing under construction. This means the actual deal price of the latter may be slightly higher.
The housing price growth also caused changes in buyers’ behaviour.
According to Bonava Latvija sales and marketing manager Kaspars Ekša, a trend has been observed in the past several months, when buyers more often pick housing options that are more well thought through both size and maintenance cost-wise: «We can see that with increased inflation and more expensive living in general people have started looking at housing functionality more carefully. This includes being able to regulate and set the volume of public utility payments. For example, in new apartment projects people can regulate room temperature and pay only for the heating energy that is actually consumed, which allows them to control their heating costs more carefully. This helps save money, which is becoming more and more important in the current situation.»