Residential Market Commentary 2009 Q3 - Latvia

In Q3 2009, residential real estate prices at least stopped their relentless fall. In Q3 prices were stable for three months, after falling 8.8% in Q2, and plummeting 29.3% in Q1.

The average price for old construction flats in suburbs of Riga by the end of Q1 was 763 EUR/sqm, in Q2 was 478 EUR/sqm, then fell to 460 EUR/sqm in July and stayed there through the whole Q3. This could be the break point where owners are not ready to sell their property cheaper. In Q2 2009 the price for such flats was 37% lower than in Q1 and 47% lower than by the end of 2008.

In last month supply declined. New properties for sale tend to be only the properties where owner are forced to sell property fast because they cannot pay their loans. Owners who are not forced to sell choose not to sell today, and that’s why it’s hard for buyer to find property which suits all needs and have relatively low price.

Speculators – both foreign and local – look through a large amount of offers, but because of the continuously declining economy and lack of bank loans they don’t make any decisions.

All things considered above there is also no reason for price increase. Transaction level in 3Q was approximately the same as in 2Q – 400 transactions per month in Riga.

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