In the bank: 49.2% of Latvian residents expect real estate prices to rise in the next year – BNN

49.2% of Latvian residents currently predict an increase in real estate prices over the next 12 months, which is slightly less compared to the autumn survey, informs representatives of “SEB banka”, referring to the SEB Housing Price Indicator.

On the other hand, the proportion of predictors of housing price decline has remained almost unchanged and is 13.4%.

The share of the population with a neutral attitude, that is, those who assume that housing prices will not change in the next year, is currently 25.8%, which is a little more than last fall. On the other hand, 11.5% of respondents do not have a specific opinion about possible changes in real estate prices.

The highest percentage of predictors of housing price growth still remains in Zemgale – 73%, which is not only the highest percentage compared to other regions, but also an increase of 10 percentage points since the autumn survey.

It is followed by Latgale, where 58% of residents expect real estate prices to rise, Kurzeme (46.5%) and Vidzeme (44.7%). On the other hand, the least number of those who expect price increases are in the Riga region – 43.1%.

This time, the largest number of those who predict a decrease in real estate prices are in Vidzeme and the Riga region – about 16.5% of the respondents.

The value of the SEB Housing Price Indicator – the difference between the number of house price rise and fall forecasters – this spring is a little lower than last fall and is 38.2 points.

Analyzing the responses of the respondents in different socioeconomic groups, it was concluded that the majority of people who expect an increase in real estate prices are among the population aged between 25 and 34 – about 55%, as well as between the ages of 18 and 24 – 54%. Similarly, students (65.5%), housewives (57.5%) and entrepreneurs (56.2%) share a similar attitude.

The least number of those who expect real estate to become more expensive are among senior and middle-level managers (36.8%).

In terms of income, the majority of those who predict a price increase are among low and middle income earners – 59% and 53%, respectively. Among the recipients of high and medium-high incomes, there are also the most of those who expect a decrease in the value of real estate – 28% and 31%, respectively.

The fact that expectations regarding the real estate market have settled down a bit during the winter is understandable, explains Dainis Gašpuitis, economist of “SEB banka”. The past period was quite challenging for many households and the signs of economic recovery at the beginning of the year were very unconvincing, the market was dominated by low activity.

On the other hand, the economist admits that, avoiding major shocks, the overall expectations for further price increases have remained at a very high level, including in comparison to their changes in neighboring countries. However, Gašpuitis points out that the high level of price increase expectations does not indicate a rapid return of activity to the market. The optimism of the index is raised by groups whose participation in the market is unlikely, rather they reflect the perception of the rapid rise in overall costs.

“Respectively, respondents who are more optimistic than average have basic education, low income and live in rural areas. On the other hand, residents of Riga, mid-level or higher-level managers with high incomes have a much more down-to-earth rating. From this comes the conclusion that the real estate market will continue to move positively, but not rapidly, and the recovery of prices will be slow,” explains Gašpuitis.

The survey was conducted in March 2024 in cooperation with the research center SKDS. Using the method of stratified random sampling, 1004 permanent residents of Latvia aged between 18 and 75 were surveyed throughout Latvia, conducting direct interviews at the respondents’ places of residence.