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Latvians increasingly optimistic on housing prices

SEB’s Housing Price Indicator in Latvia in August reached its highest level since measurements began in 2009. The underlying survey commissioned by SEB shows that 38 per cent of respondents now expect housing prices to rise while only 9 per cent expect declines over the coming 12 months.

The value of the SEB Housing price indicator, which is the difference between the number of persons who expect a rise in prices and the number of persons who expect them to fall, reached 29.3 points in August. Around 35 per cent said they expect prices to remain unchanged. Around 18 per cent had no opinion.

In May 2009 when SEB first began measuring the value, it stood at -55.5 as the vast majority of Latvians expected declining prices at the time. The indicator has risen steadily since then.

Edmunds Rudzītis, household economist at SEB Latvia says: “Irrespective of the possible unfavourable impact that the euro zone debt crisis may have on the economy in Latvia, people maintain an optimistic mood and, influenced by the growth rates of the national economy as well as the record low interest rates, they display a growing interest in housing credits.”

He warns however that current emigration, a relatively high level of unemployment, the purchasing power of inhabitants, as well as peoples’ views on the economic development in Latvia are factors that do not point toward a rapid rise of housing prices in the nearest future.