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Случайная картинка из фотогалереи
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THE REVIEW OF THE REAL ESTATE MARKET IN LATVIA IN OCTOBER 2009
Размещено 24 ноября, 2009
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 (Еще не оценили) Загрузка ...As predicted by analysts Century21Baltwest month ago, the general trend in the real estate market in Latvia in October, has not changed — the prices of most objects either remained at September level or increased. As for Riga, the increase in prices, as in the last month, raised mostly small-sized apartments in the most prestigious areas of the city — the Сenter, Purvciems, Plavnieki, Zolitude and Imanta. The prices of 1–2-room apartments in those areas increased in some cases quite significantly — up to 10–12% depending on the condition of housing. The cost of 2–4 bed-room apartments remained largely unchanged, but in areas such as Vecmilgravis, Bolderaya and Jugla even fell slightly — on 0,5–1%. This trend can be explained very simply: consumers prefer to buy small apartments because of the desire to save on utility bills (especially in anticipation of winter). In addition, the number of transactions to the actual exchange of large housing for less (also with a view to reducing costs) increased in October. On average, the market of mass-produced apartments grew by about 5%. Thus, the average cost of 1 square meter of the first secondary housing in Riga is today 477 EUR per 1 sq.m. Sale prices of new projects have not changed also. There is about 800 EUR/sq.m. today. There are two reasons for it: firstly, the construction cost, and secondly, the unwillingness of creditor banks to permit developers to sell at dumping prices — so they do not recover their loans. The rise in prices on the market of the mass-produced housing has become one of the most significant developments in the Latvian real estate market over the past two years — first time since the crisis in the mortgage market in July 2007 the market not only ceased to decline, but also demonstrated an unexpected increase. After all, objective economic conditions in Latvia remain rather far from ideal. From all EU countries the Latvian Republic most of all suffers from crisis. The fall in GDP in the first half of 2009 amounted to 18,4% from January to October this year, the budget deficit amounted to 496.3 million lats (almost $ 1 billion). Official unemployment, not taking into account the hidden unemployment, according to the State Employment Agency in October reached 14,1%. The actual level of more than 18%. Nevertheless, the real estate market began to unfold. It seems that the reason lies in changing the attitudes of participants. It is important to understand that in Latvia; only 3% of the population is ready today to buy real estate?. Another 4% would like to buy, but they lack funds. With such a narrow market sentiment are crucial. According to the November SEB Indicator housing prices, the number of residents who have negative sentiments about the dynamics of housing prices, for the first time was less than the number who soon expects constant prices or their growth. Now only 35% of Latvia population (in the previous month — 39%, and in May — 62%) believe that within a year prices will be lower than today. 11% believe that prices will rise, 31% believed that prices will not change. Thus, there is the positive dynamics of the sentiments of the population. Perhaps the market has already reached a bottom, when psychologically people understand that the level of undervaluation of square meter in Latvia, such that it is impossible to lose. The only question is the time. Thus, today, the mood of the participants determines the development of the market. Can the mood change? They can, but not so much that was followed by a new landslide. As mentioned in the previous review, in sales in the market today there are mainly those who can not sell: problematic borrowers, and vulnerable residents who prefer to move from larger to smaller apartments in order to reduce utility costs for its maintenance. Any serious decline in prices simply result in an outflow from the market of sellers, especially bank debtors, which would be unprofitable to sell at such low prices — it would be tantamount to an outright transfer of property to the bank. As said the Saldo magazin in an interview with the head of SEB Ahti Asmann, «the good news is that the real estate market situation in Latvia is such that it simply can not get worse». This, of course, enjoy the speculators, especially from abroad — from Russia, Norway, Sweden and England, who can not appreciate all the benefits of today’s situation. However, the next "soap bubble» in the market should not be done — Latvian legislation in the field of mortgages today clearly directs banks to lending only to creditworthy borrowers. There are not a lot of those borrowers today in Latvia. On the one hand this fact breaks the growth of prices, on the other hand, it guarantees from the new mortgage market crisis. It is interesting that already in the beginning of November the trading Internet — platforms of Latvia have shown growth of price expectations of sellers: the prices for mass-produced apartments including the large-sized flats were declared sometimes on 15–20 % above the real market. But today the consumers are not ready to buy at such prices. Such situation means only one — the market is on the eve of a turn. This period may last for several months and in the beginning are accompanied by reduction in the number of transactions — because of the sharp divergence between the expectations of sellers and buyers. Is it possible the sharp rise in prices in the near future? It is possible only in two cases: a substantial devaluation of the Latvian Lat (just such a view is held by Swedish Swedbank ?) and real positive change in the economy. The first is highly desirable to restore the competitiveness of Latvia on the world market, but the Government, following the monetarist installations of IMF has stated many times that will not allow such a scenario. The second is improbable for the obvious reasons: the economy is in a severe systemic crisis resulting from the errors of European integration. This crisis becomes long and how quickly it will end, depends, first of all, on actions of the authorities (not only central, but also municipal): whether they can effectively stimulate two basic directions of new Latvian economy: tourism and transit. . Obviously, a lot will depend on relations with Russia, therefore to say anything definite is extremely difficult — in the actions of the ruling coalition the economic pragmatism often depends from political preferences of the Government. At the same time it is necessary to give due to the Government that it did not kill by means of it's decisions the real estate market in Latvia: after long discussions on the introduction of the real estate tax, coalition parties seem to agree on the annual tax of 0.1% of cadastral value. This is the most painless option of all previously proposed. In general, experts believe, this tax is unlikely to bring big profits to the budget — the indirect costs of collecting this tax is likely to swallow the amount the government collects. Fairness, it is worth saying that the bill has not yet approved by the Latvian Parliament. But in any case, it positively impacted on the development of the market in the past month. Thus, if the government will not change its financial policy and the rate of LVL will remain unchanged, objectively, we will be prepared for sideways trend in the near future. However, subjectively, all will depend on the mood of participants. If the number of optimists who want to buy, will increase at least 1%, this will lead to higher prices, how we have seen it in October. In this connection, special importance should be given to foreign investors, who, despite their small number, can in this situation swing the market up. As already stated, increasing interest from foreign speculators have a place to be. In particular, the recent exhibitions of the foreign real estate in Russia, especially the most popular Moscow International Property Show, held November 13–14, has demonstrated a remarkable growth of interest from middle-class Russians to purchase housing in Latvia. The degree of relevance of the incentives of potential Russian investors can be built up in the following order: low cost of the Latvian real estate; the possibility of obtaining a multiple Schengen visa, and possibly in the residence in the future; Russian language and mentality; the environment and the benefits of the Latvian resorts. The main obstacles to foreign investment (not only Russian) remain: the difficult economic situation of the country and low rental rates (7–10% per annum). Dr. Valery Engel, Похожие новости:Категории: Мнение, Недвижимость, Экономика ЛатвииОставить комментарий
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