24 Mar 2011 09:55

Perception more prudent on Latvian housing prices

All regions of Latvia still show more optimism than pessimism with respect to the rise in real estate prices with respondents from Vidzeme being the most optimistic again at 38 per cent saying they expect higher housing prices 12 months from now.

During the past month, SEB’s Housing Price Index for Latvia fell by 9.3 points to 16.8 points. Last month, the index reached its highest ever score of 26.1 points. This is the third time since May 2009, when SEB first introduced the index, that it fell on a month-by-month basis and this is the largest decrease within a month thus far.

The index describes the difference between the percentage of respondents that believe in rising prices and the percentage that forecast lower prices.

Household economist at SEB in Latvia, Edmunds Rudzītis, points out: “Nevertheless, the respondents’ forecasts regarding the increase in housing prices are more positive than a year ago. Compared to March 2010, the Housing Price Index has increased by 25 points. The mood of the respondents seems to be impacted by the changes expected in taxes and tariffs, and the ever growing maintenance costs of housing.”

The number of respondents who forecast a decrease in housing prices has grown by three percentage points since February, and now 16 per cent of respondents from Latvia believe that prices on the real estate market will fall in the coming year. Last month 13 per cent of respondents forecast lower prices. 34 per cent of respondents (in the previous month, 32 per cent) were of the opinion that housing prices would not change within a 12 month period. Like in previous months, the survey shows that 17 per cent of respondents have no specific opinion on the changes in real estate prices in the upcoming year.