RESIDENTIAL REAL ESTATE

[Property Guide Latvia]

Residential real estate is a type of real estate designed for living, as opposed to working, manufacturing or providing services. Residential property is generally divided into private houses and multifamily residentials. Private houses are single-unit buildings designed to accommodate a single person or a group of people who share the whole space of the house. Multifamily residentials are multi-unit buildings designed for a number of people or groups of people, where each person/group of people occupies one unit and does not share units with other people/groups of people.

It should be noted that these definitions are based on the intention, i.e. the initial main idea, with which residential property is constructed. Naturally, a private house can be divided into separate units by its residents, and one person can own multiple units in a mulitfamily apartment complex, but that does not change the type of estate.

The two primary ways of obtaining a residential estate are buying and renting it. In the EU, 70.5% of residents are full owners of their property, while the remaining 29.5% are renting it out. Out of all owners, about 39% are paying a mortgage loan, while 61% have no active mortgage.

Residential estate in Latvia
As of 2017, Latvian residential real estate market is in its growing phase. On average, the prices for real estate grew by 9.75% in the last year, while demand also increased by 10.5%. This is all despite the fact that the economy only grew by 0.8% in the same period, which allows predicting the continuation of this growth in the nearest future. Two other factors that may have contributed to this growth are declining mortgage interest rates, which make applying for a loan easier, and the introduction of the Mortgage Loan Programme in 2015, which allows applying for mortgage with state-issued guarantees.

In 2009, there was a drop in supply of residential real estate, meaning that fewer houses and apartment complexes were built. Many of the projects started at that time were subsequently frozen and are only now returning to activity. Some of them are still being completed. I general, the housing supply is recovering slowly, but steadily — around 2 500 new units are being completed annually, which is a growth of about 20% from the previous periods. Despite that, it is still far from the pre-2009 peak of 9 000.

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