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Latvians see rising housing prices 2011

SEB's housing price indicator in Latvia declined slightly in December but 38 per cent of the population still believe prices will rise over the coming 12 months.

The indicator dropped to 21.9 in December last year from 23.3 in the previous month as more respondents in the survey indicate they believe prices will drop.

SEB's housing price indicator for Latvia has grown sharply during the past year. It stood at a negative 19 in January and has thus grown 41 basis points since then. The index shows the difference between the percentage of respondents that believe in rising prices and the percentage that believe in falling prices.

"The growth in SEB's housing price indicator has now slowed down. Furthermore, during the 18 months since we started collecting data on the public mood in Latvia this was the second month (previously August 2010) when the index decreased on a month-to-month basis," says Edmunds Rudzītis, household economist at SEB in Latvia.

He notes that the general public mood is described as stable and radical shifts in the mood and in real estate prices are not likely to take place in the near future.

"The mood index alongside with housing prices may stagnate at present levels until springtime or decrease slightly," Rudzītis says.

In the December housing price indicator survey 16 per cent (15 in previous month) of respondents said they believe in falling prices, 29 per cent (30 in previous month) believe in stable prices. About 17 per cent didn't have an opinion.