Activity in the high-end property market is a quarter lower this year.

Jurmala still plays the most important role in the market of premium private houses in Latvia. In the first six months of this year, 12 premium private house transactions worth 10.2 million euros took place in the resort town, or 70% of all premium house purchases in the country, according to the research on transaction activity conducted by the premium segment real estate company “Baltic Sotheby’s International Realty”. In the first half of 2020, in the three reviewed regions and three premium property market segments: apartments, private houses and building land in Riga, Jurmala and Pieriga. The data collection examines information on apartments and building land worth more than 150,000 euros and private houses that cost more than 350,000 euros. The pandemic experienced in the first half of the year also left a certain impression on premium private house transactions: in 6 months, a total of 17 premium private house purchases were recorded for the total amount of 12.4 million. EUR, which compared to the relevant time period last year, is 7 transactions less or 4.1 million. EUR in smaller transaction amounts. It is true, if you compare the data of this half year with older data, it can be seen that a couple of years ago – in the 6 months of 2018 – even fewer premium private houses were purchased in total – 15. “Baltic Sotheby’s International Realty” co-owner and chairman of the board Vestards Rozenbergs explains: “Our a study on the premium property market in Latvia this half year shows that the government’s decisions sometimes have a much greater effect on the real estate market than the virus pandemic. the total amount of 64.4 million euros, and the average transaction value of transactions decreased slightly – by 5.6%, then in 2015, after the amendments adopted by the government to the rules of temporary residence permits, which significantly limited the performance of premium transactions for foreigners, the number of transactions was significantly lower – 215. A pending position of customers and a lower number of premium property transactions this half year is not only a phenomenon of Latvia, the uncertainty caused by the pandemic and various restrictions have caused certain corrections in this market and have made it difficult to conduct transactions. It was evident that not only in stock exchange transactions, but also in the real estate market, buyers who could wait to make transactions did so: either waiting for the situation to normalize or for the price to drop. I see no basis for large downward price corrections in the Latvian premium market, because even currently the prices of high-class properties are adequate in relation to their quality. It is quite difficult to make predictions for the second half of this year, there are still many unknowns: how the virus will be contained in the future in the world and in Latvia, whether the restrictions will be softened or strengthened. However, at the beginning of this summer, we already felt that customer activity is increasing, bank representatives are also observing the restoration of customer interest to previous levels. Also in some parts of the world already in May, the real estate market returned to the positions of the beginning of the year and even showed growth, which suggests that the optimism of customers is renewed. This is important because the property market and developments in it are closely related to the health and “feeling” of the economy. Investments in premium properties will certainly not lose their relevance as a valuable, long-term asset.” In the Latvian premium property market, the majority of transactions have always been the purchase of high-class apartments, followed by private house transactions. This year, premium private house transactions accounted for 7% of the total number of premium transactions, or in monetary terms – approx. 20% of the total value of premium property transactions.

In the first half of this year, 10.2 million properties were purchased in the resort town. in the value of EUR, which, although it is still the largest segment of this market – 70% of the total market of premium private houses, it has decreased by 2.6 million. euro compared to the previous year. This value was made up of 12 transactions, which is three fewer home purchases than a year ago. In Jurmala, private houses still cost 850,000 euros on average. The premium market of the resort town has traditionally been more oriented towards customers of a higher paying class, which leads to the conclusion that the sufficiently persistent activity in the segment of premium private houses in the resort town has made customers consider it as a safe place to “winter over Covid-19”. In Riga, the market of premium private houses has seen a slight increase in the amount of transactions from 822,500 euros at the beginning of the previous year to 900,000 euros this year. This statistic consists of only two transactions both this year and last year. Private houses in Pierīga were less interesting for market participants this year. 3 houses were purchased in this area for a total value of 1.3 million. euros (compared to the year before: 7 houses for a total of 2.8 million euros). Ilze Mazurenko, co-owner and board member of “Baltic Sotheby’s International Realty”, explains: “This year’s events led to adjustments not only in the habits of customers, but also in the everyday life of property sellers. Travel and contact restrictions made it difficult and prolonged the execution of transactions: it is now more difficult for foreigners to move around and view the intended property in person property, but the local client, who was already carefully considering the purchase of premium properties, may have diverted his free funds to stabilize his business Virtual tours of properties were increasingly used, allowing to get to know properties in absentia. Also, this half year made clients reassess the importance of their properties: therefore, less funds were invested in premium properties, but it was enough purchased properties for own use, allowing isolation. I expect that the relevance of purchasing premium private houses will certainly not decrease, because in the new reality people need more spacious properties, which we appreciate when all the householders have to stay together and work remotely. A wide, green outdoor space is also appreciated, which allows you to feel closer to nature. The saying “My house, my castle” has become very relevant this year from the point of view of health safety.” Arnis Škapars, a member of the board of “SEB banka”, adds: “In the first two months of the year, we saw very good activity in the Latvian housing market: such as it has been in the last during the years. A very sharp slowdown occurred with the onset of pandemic-related restrictions in the second half of March and in April. On the other hand, in the second half of May, there was a significant increase in activity. This confirms that this year is very volatile, but customer behavior and demand follow the background information – more uncertainty means more caution. In July, we have returned to the level at the beginning of the year in terms of mortgage lending. I would say: in July, we are approximately 10-20% below the July level of last year in housing lending. Sellers have become more flexible in negotiating the price of properties, but we do not see properties selling at very low prices. There is more interest in relatively small private houses in Pieriga. Properties that were bought as a business – for short-term rental have become less interesting.” See the full version of the article here!