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The Baltic countries, which recently stand out in the property sector, continue to grow in this field. This provided serious dynamism in the property market. Investors who want to buy housing from Lithuania, Estonia, and Latvia have increased considerably recently. Well, what should be considered when buying housing in the Baltic countries? Which types of residences are more advantageous for investment?
Factors Affecting the Property Market: Price and Population
Before examining what kind of housing people prefer, it would be more appropriate to look at the factors that are effective at this point. Population and changes in prices are the main factors. Let’s first examine the population.
The Effect of the Population on the Property Market
In general, the populations of countries increase at a certain rate or stay the same over time. Sometimes, small decreases can be considered normal. However, in the Baltic countries, the situation changes completely. When the populations of the Baltic countries are examined between 2000 and 2020, it will be seen that there are serious decreases. During this period, the population decrease in Latvia and Lithuania is more than 20%. In the same period, the population of Estonia decreased by approximately 4%. The numbers here are extremely high. Therefore, it should not be forgotten that this change has greatly affected the property market.
While the population change in countries is like this, the rate of change in some important cities is different. Especially in the last four years, while the population increased by 6% and 2% in Tallinn and Vilnius cities, respectively, it decreased by 2% in Riga.
As it is known, when the population decreases, the demand naturally decreases. This means a decrease in prices. While demand decreased in Riga, it increased in other cities.[1]
The Effect of Prices on the Property Market
Demand and total costs are the basis of price formation. Therefore, it can be said that the information given above is also effective on the price. However, the fact that different factors also affect the price requires this variable to be examined separately.
Due to the increase in the population, the average price per square meter of a house in Vilnius has increased to around 1,700 Euros. Looking at the average of Lithuania in general, it will be seen that the figure is about 2,000 Euros. Prices in Tallinn are slightly higher, with average figures around 2,700 Euros. Prices here may differ depending on the location of the residence and the quality of the materials used.
Looking at Riga, it will be seen that prices start at 1.700 Euros and in some projects go up to 2.500 Euros. The m2 prices of new and luxurious residences are particularly high. Therefore, it can be said that there is no single criterion for determining house prices in the Baltic countries.
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Housing Types Preferred
Above, we mentioned some factors that affect the housing preferences of people and investors. Now, let’s look at the housing types most preferred by people living in the Baltic countries.
There has always been a lot of interest in apartments of standard type throughout Latvia. However, the interest in this type of housing has decreased relatively recently. This is considered good news. Because, although the standard type apartments are much cheaper than the new generation apartments, it is a known fact that they incur additional costs later. Therefore, taking into account these additional costs, people prefer the standard type apartments less compared to the past.
The most important customers of comfortable and high-quality apartments are young families. Looking at the luxury apartments, it will be seen that their sales levels are low. However, the prices of luxury apartments are still around 3.100 Euro / m2. So there is no decrease. The ease of renting the luxury apartments and the high rental income is considered as the reason for this situation.
Apartments in the private segment have always been preferred by non-resident foreign investors. However, recently, it has been observed that these types of apartments are also preferred by wealthy local people.
Riga vs. Pieriga
As we all know, Riga is the capital and most lively city of Latvia. You can learn more about Riga from our article. Despite the population decrease in Riga in recent years, a population increase has been experienced in Pieriga. Looking at the rates, it can be mentioned a decrease of 17.5% in Riga and an increase of 22.9% in Pieriga. The reason for this may be the desire of people to be in touch with nature. It can be said that due to the increase in the population, the demand for housing in Pieriga has increased more each year. The average purchase price here is around 180,000 Euros.
Unlike Pieriga, the decrease in the population in Riga caused the demand to remain unchanged or to decrease a little. However, Riga’s peculiarities have enabled this decrease to be limited.
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Long-Term Thinking in the Choice of Housing
Housing has serious advantages both as a living space and as an investment. However, when buying housing, it should be considered as long term, not short term. The factors around the house, the time to see the sun, its balcony, the general profile of people in the neighborhood and the like should be taken into consideration. The choice made as a result of all these will ensure that you get more of your investment.
It is also important to know the application and legal procedures for housing investment in the Baltic countries. Having detailed information on this subject will prevent both the loss of time and misjudging your investment.
As InvestLatvia.net, we carry out all your investment transactions and all legal procedures required for housing purchases on your behalf very quickly. You will enjoy completing your investment with zero stress and zero risks by making the right investment in a very short time.
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Igors Krumins continues his activities as a commercial and international lawyer within the body of “Jurmala Invest”. He has more than 10 years of experience, especially in the investment sector, and has provided consultancy services to numerous companies with his legal expertise. He successfully completed his undergraduate studies at Baltic International Academy and graduate studies at Latvijas Universitate. Apart from his native Latvian language, he can also speak Russian and English fluently.
