In May of this year, a third or 33% of home purchase transactions take place without attracting bank financing, according to the latest “Home Buyer Confidence Index” of the real estate company “Latio”.
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This is a similar figure for non-bank financing real estate transactions in the previous six months or so.
“Home Buyer Confidence Index” data for May:
– 83 days – on average, it took this long to sell a home at the market price (in April – 81 days; in March – 83 days; in February – 85; in January – 80; in December – 70; in November – 61);
– 7% of homes were sold within one month from the moment of publication of the ad (April – 6%, March – 5%; February – 4%; January – 4%; December – 5%; November – 5%);
– 50% of sellers have demanded a disproportionately high price for the market situation (April – 49%; March – 51%; February – 50%; January – 52%; December – 52%; November);
– 1% of buyers have offered a higher price than indicated in the advertisement (April – 2%; March – 2%; February – 1%; January – 1%; December – 1%; November – 1%);
– 33% of transactions took place without borrowing (April – 33%; March – 31%; February – 30%; January – 29%; December – 29%; November – 28%).
Source: “Latio”
Transactions for own money take place both in Riga and its surroundings, as well as in certain regions, such as Zemgale.
“Latio” has observed that, on the one hand, buyers’ skepticism about apartments in need of renovation has really decreased due to the lower price, because often houses in series-type projects are the only thing that the buyer has “in his pocket” under these conditions. On the other hand, the cheapest objects require large additional investments in their improvement, which, taking into account the extremely high costs of building materials and construction works, often discourages potential buyers from purchasing such apartments. This is especially applicable to those who buy apartments for their own needs – the market has maintained a strong desire of buyers to move into the specific property almost immediately after purchase, without spending additional resources on improvement processes, “Latio” experts concluded.
In the past, buyers actively bought such apartments with the aim of refurbishing them and offering them for rent, but now, thanks to a more than 20% increase in the prices of building materials during the year, the renovation of apartments has become much more expensive, subsequently increasing the possible rent of the object and further narrowing the circle of potential interested parties. .
At the same time, in the regions, more transactions take place with bank credit.
“Latio” indicates that currently the “Euribor” rate has reached almost 3.8%. This can be seen as a 20-25% increase in borrowers’ monthly payments. For comparison: if a year ago you had to pay about 500 euros for a loan for a two-room apartment in the new project, now the monthly loan amount has increased by 100-200 euros, excluding utility payments.
However, “Latio” has concluded that although borrowing to buy a house has become much more expensive, society is gradually getting used to the new situation and looking for solutions, for example, choosing a longer mortgage payment term, reducing the amount of monthly payment or refocusing on smaller-sized houses.
According to the observations of “Latio” business managers, elderly people are more active in offering their real estate on the market, mainly seeking to move from a private house to a one- or two-room apartment.
2023-06-04 12:14:39
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