Industry experts: There will be a shortage of new apartments in the next two to three years

“On the one hand, if we look at the number of houses put into operation, it is quite a lot. There has not been such a wide offer of finished apartments on the market for several years, so this situation is beneficial for buyers, because it is finally possible to physically view, walk around and buy exactly the kind of housing you want. This is also confirmed by the sales statistics of “Bonava Latvija” – currently the majority of transactions take place directly with completed apartments. On the other hand, most of the available apartments are located in locations that buyers may or may not like, and the rest of the finished houses are basically small remnants of almost sold projects scattered all over Riga and Pieriga,” says the marketing and sales manager of SIA “Bonava Latvija” sales manager Kaspars Ekša.

As revealed by Agija Vērdiņa, head of the Research and Consulting Department of Colliers Baltic, the average registered transaction for an apartment in a new building in 2023 was 152,000 euros, compared to 131,000 euros in 2022. On the other hand, in the segment of renovated projects, developers have switched to selling apartments without interior decoration, thus allowing lower sales prices to be maintained. As a result of these changes, the average transaction has remained unchanged – around 100,000 euros.

It is expected that in the next two or three years, the real estate market will be significantly affected by the fall in the volume of plots purchased by housing developers, which has been experienced with the war in Ukraine and the increase in Euribor.

Since in 2020 and 2021 there was a high demand for apartments in the first-time market, in 2023 there was a significant increase in the number of apartments added to the market. However, the number of sales transactions registered last year in the market of new apartments decreased by 6% compared to 2022. On the other hand, the average transaction price registered last year showed a stable monthly increase, the price per square meter of registered transactions increased by an average of 14% compared to the previous year. Therefore, the total amount of sales in the market of new apartments last year reached 305 million euros, which is 5% more than in 2022.

“Whether the welcoming of developers will be observed this year as well depends on various factors, however, it is very likely that some special offers could be canceled in the near future. The slow pace of development of new projects means that soon the supply of new housing could begin to shrink again, but prices, as demand exceeds supply, could rise. Therefore, those who have decided to buy a new home should not postpone this decision even more – or should postpone it for several years,” summarizes Kaspars Ekša.

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