The Covid-19 pandemic has affected all of Europe since the beginning of 2020. In this process, the Baltic countries were relatively less affected than the other countries, thanks to the measures they have taken. However, despite this, the economy was seriously damaged, as in all European countries. So, is the property sector among the economic sectors affected by the Covid-19 pandemic? How has the pandemic affected the property sector in Latvia? Has there been any change in housing prices? All the details are in our article.
The Uncertainty in the Property Sector in Latvia
The pandemic had been on a marked decline since July 2020. This decline caused almost all countries to decrease the measures or even to abolish them completely. However, since September 2020, the pandemic has started to increase again. So the second wave which experts had long been warning about started. The second wave is much more severe than the first wave, and it is getting bigger every day. Under these circumstances, it can be said that minor uncertainties started to occur in the property sector in Latvia.
Latvia is one of the rare countries that have done a very successful job in combating the pandemic. But, the uncertainty in Europe is inevitably reflected here as well. It is expected that this situation may cause some adjustments in property prices. However, it is very difficult to predict which direction the adjustment will be. Therefore, in this period, it is important to invest wisely in the property.
Everyone believes that property prices will fall due to the pandemic. It is thought that the slowdown of the economy and similar reasons will trigger this. However, the situation may not be exactly as expected. The reason is that people leave their homes much less often due to the pandemic. This situation means a serious saving in financial terms. Those who make these savings can focus on home renovations and home replacement over time. When such a situation occurs, property prices may not fall as expected. On the contrary, it can enter an upward trend. It is known that a similar situation was experienced during the crisis in 2009.
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The Effect of Tourism on the Property Sector
As is known, Latvia is a country that has been attracting a high number of tourists from abroad recently. These tourists generally prefer regular apartments instead of hotels. This situation means a serious income for property owners. However, with the pandemic the number of tourists coming decreased in Latvia as in every country. Thus, property investors expecting rent from tourists faced a serious loss of income. This situation deeply affects the property market. Some investors want to exit the property sector as it is not known exactly how long the pandemic will last. On the other hand, those who intend to invest continue to use their investments in favor of properties by turning this crisis into an opportunity. One of the reasons for this is the low rate of property taxes in Latvia and the incentives provided by the government.
Besides, reaching the final stage in the vaccination studies carried out by many companies also reveals the possibility that the pandemic will end in a short time. If such a positive development occurs, the property sector will again experience a serious recovery. And prices will increase accordingly. Therefore, it can be said that at this point there is some uncertainty in the minds of investors.
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The Latest Status of the Property Sector in Latvia
To sum up in general, like the whole world, Latvia has been affected by the pandemic. This situation has also affected the economy. This situation is reflected in the property market as uncertainty. However, the fact that Latvia is less affected than other countries and that some of the vaccination studies have reached the final stage indicates that the property sector will revive again. This expectation caused the prices in the sector not to fall too much and investors to wait. It can be said that there is such uncertainty in general during the pandemic period for the property sector in Latvia. However, the general opinion is that property investments will be more profitable after a short period.
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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.