In 2023, slightly more than 1,730 apartments in new buildings have added to the housing market. On the other hand, this year, if the construction is not delayed, the first-time market could be supplemented with a little more than 1,600 new homes, referring to the calculations of the real estate consulting company “Colliers”, reports Kaspars Ekša, head of sales and marketing of the housing developer “Bonava Latvija”.
The decline in construction volumes in the new housing segment has decreased significantly, which can largely be explained by the decline in people’s purchasing power and demand, which was mainly influenced by the unfavorable lending conditions of banks and the global increase in construction costs.
“The existing construction volumes raise reasonable concerns that when credit conditions improve and demand returns, the market will not be able to meet the population’s need for energy-efficient and sustainable housing,” he points to one of the scenarios.
Therefore, a part of the population may be forced to look for an offer on the secondary market, risking getting housing that does not meet their needs. According to Eksha, banks should already come up with attractive offers that significantly stimulate lending for the purchase of houses of the highest energy efficiency class. “This could restore consumer demand more quickly, while allowing developers to ramp up construction volumes and thus prevent a looming shortage of new housing in the market.”
“Bonava” explained the potential demand in a survey last fall. It follows that more than 20,000 residents of Riga are considering buying a home in the new project, while approximately 12,000 residents of the city are considering buying an apartment in a pre-war or Soviet-era serial building, according to the data of the survey conducted by the housing developer “Bonava Latvija”.
In general, 31% of respondents are considering buying or building a home in the next few years, while on a national scale, on average, every fourth person plans to get a new home.
People aged 18 to 29 are most willing to consider buying or building a new home in the next few years – in this age group, 46% of respondents emphasize their commitment to realizing their dream of owning a home. 59% of them would choose an apartment in a pre-war or Soviet-era serial building. Of the respondents of the same age group who are considering purchasing an apartment in four to five years, 83% would prefer housing in the new project. Similarly, respondents aged between 30 and 49 are ready to make a choice in favor of housing in the new project.
Taking into account the regional division, the interest of the residents of Riga in purchasing a home in the new projects is twice as high as in other cities and regions, where the desire to buy or build a private house dominates the responses of the respondents.
The biggest obstacles that prevent people from buying a new home are too high housing prices (49%), too high interest rates on bank loans (41%) and difficulty saving for a down payment (25%). Respondents also mention a lack of confidence in their ability to repay the loan (18%), too low income (12%) and the inability to qualify for support from the financial institution “Altum” (6%). Only 7% of respondents in Latvia state that there are no obstacles for them to buy a new home (10% in Riga).
The “Purchase of housing” survey was conducted by “Norstat Latvija” in November 2023, surveying 1,003 residents aged 18-74.
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2024-01-14 18:34:12
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