After a two-year break, a serial decline in apartment prices has been observed

For the first time since 2020, the market has seen a serial decline in apartment prices, which has been facilitated by several factors, and it is predicted that, if the conditions do not change significantly, the price decline could continue in the coming months. This is shown by the data collected by the real estate company Latio in the “Housing Market Confidence Index”, which summarizes five indicators that most effectively describe the situation on the market in the past month. “Homebuyer Confidence Index”* data for August:

32 days – on average, it took this long to sell a home at the market price (28 days in July);
14% of homes were sold within one month from the moment the advertisement was published (16% in July);
63% of sellers have demanded a disproportionately high price for the market situation (60% in July);
4% of buyers have offered a higher price than indicated in the ad (7% in July);
26% of transactions took place without borrowing (24% in July).

Analyzing the market, it can be concluded that in general it became a little more active in August – compared to July, both the number of advertisements and concluded transactions increased. At the same time, the number of days during which houses are sold at the market price has also increased. This can be explained both by the wider offer and opportunities for buyers to consider their decision for a longer time, as well as potential buyers’ concerns about the expected costs of the heating season and the consequences of inflation, including the current and possible increase in Euribor. Banks’ credit policies, which have often become stricter, also have their influence, for example, when purchasing a property that requires additional investments, an estimate of the planned works and a confirmation that such funds are at the disposal of the buyer may also be requested. At the same time, compared to January of this year, the supply of serial apartments increased by 58% in August. The significant increase is mostly made up of large-area properties, often with non-modern finishes, and also energy-inefficient. Although buyers are currently looking for the opposite, the supply of new projects is very small. In August, only about 624 newly built apartments were available in Riga, which is 15% less compared to January of this year. This market situation still allows owners of unprofitable apartments to sell their properties. True, not wanting to lower the price, it has become much more complicated and, without attracting mediation specialists who know the specifics of addressing potential buyers and how to highlight the best features of objects, it is almost impossible in a reasonable time frame.

Read the full article here