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SEB’s Latvian Housing Price Indicator hits new high

Over the past month, the indicator has increased by 4.1 points to 26.1 points. It has grown by 37.4 points compared to February 2010 when the overall mood regarding the increase in housing prices was negative. The indicator shows the difference between those forecasting rising prices and those forecasting falling prices in the coming 12 months.

SEB’s Latvian household economist Edmunds Rudzītis points out: “The rising prices for food, raw materials and energy contribute to the overall expectations of inflation. In addition, the construction index has shown some growth in recent months. The public mood regarding future development scenarios for housing prices reflects the expectations regarding inflation and rising prices in segments that are sensitive to the public.”

The higher indicator value was particularly boosted by the decline in the number of respondents forecasting falling prices. Since May 2009 when SEB started collecting data for the Housing Price Indicator, the number of respondents who forecast a decrease in the housing prices shrank notably and at present this is the lowest number ever. The number of respondents believing in unchanged housing prices shrunk by 3 percentage points to 32 per cent. About 17 per cent said they had no opinion on the matter.