Will the crisis in the Middle East drive up prices in the Latvian housing market?

There were forecasts that this situation could influence the decisions of the European Central Bank regarding interest rates and thus contribute to an increase in mortgage costs. Additionally, if energy prices rise for a long time, construction costs across all segments, including housing, may increase. So far, the conflict in the Middle East has not had a significant impact on the Latvian housing market, reports Diena.

The geopolitical situation in the world can influence the economy, but "the Latvian housing market in the long term mainly depends on local factors - the income levels of the population, lending conditions, and the availability of new, quality housing," says Mareks Klavins, head of the development company Bonava Latvija. In recent years, the Latvian housing market "has demonstrated its ability to adapt to the changing economic environment, and this allows us to predict that this resilience will continue."

With rising energy prices and, consequently, increased household expenses on housing, the demand for modern and energy-efficient housing is only growing. Previous experience shows that even in difficult economic periods, this demand remains stable. Therefore, even if global events in the near future cause caution in financial markets or a slight increase in construction costs, this is likely to lead only to moderate market fluctuations rather than significant changes, predicts Klavins.

If we assess last year's trends in the real estate market in the regions of Latvia, the highest activity was recorded in Kurzeme, while the lowest was in Latgale, reports the real estate company Latio. The average price per square meter of an apartment in the cities of Kurzeme is 600-1050 euros. Liepaja was the leader in the number of transactions last year, where the demand for housing is high, and prices for high-quality, renovated properties increased by 9%. High demand is observed for both three-room apartments and small houses.

The housing market was also active last year in Zemgale. There was particular demand for three- and four-room apartments in Jelgava, but such offerings are limited. "In search of a compromise, some buyers prefer to live outside Jelgava, where more spacious housing can be found at lower prices," describes the situation in Zemgale Inese Storkha from Latio.