Apartment prices in new projects have risen by 20 to 30%

Since the middle of last year, apartment prices in new projects have risen by about 20 to 30%, in other apartment segments the price increase is more moderate – around 10%, according to the observations of Luminor Bank experts. This situation has mainly arisen due to the increase in construction prices and the limited supply of new projects, while the supply of serial apartments is much wider. “The high demand for new and energy-efficient housing together with the limited supply has contributed to the rapid increase in prices. Due to inflation and price increases, residents plan their budgets more and more, trying to reduce communal expenses in the long term, so in the future, residents’ interest in renovated serial apartments could grow more and more. These apartments can serve as an alternative for those customers who may have originally planned to buy a home in the new project, but due to the price increase, they can no longer afford it,” explains Kaspars Sausais, Luminor’s home lending expert. Accordingly, the price increase has also affected the average amount of the home loan – it has increased from 75 thousand euros to 85 thousand euros within a year. The rental market will be affected by the spread of Covid-19. As the expert predicts, the development of the rental market in the coming months will be affected by how the spread of Covid-19 will develop and whether any restrictions will be implemented to reduce the spread of the disease, which will have an impact on both tourism and on-site studies and work. “In the past, due to the pandemic, short-term rental apartments ended up in long-term rentals, but now the opposite is happening, and a large number of apartments are re-rented on a short-term basis. This is due to the lifting of Covid-19 restrictions and a significant increase in the number of tourists in the summer months. The development of the pandemic will determine what will happen to these apartments in the future. Students usually also need apartments for rent in the fall, but if studies take place remotely, the demand will decrease,” K. Sausais predicts. This year, the rental market was also affected by the demand of Ukrainian refugees, who mainly settled in Riga or in larger cities and rented residences.

Read the full article here