Buying real estate in Latvia?

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Is it a good time to buy a property in Latvia in 2024?

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Everything you need to know is included in our Latvia Property Pack

Are you thinking of investing in property in Latvia? Are you wondering if it's more advantageous to buy at this moment or defer until next year?

Market timing is a subject where people have different perspectives. The Latvian real estate agent you know might advise you that now is the opportune time to buy property, while your childhood friend from Riga may suggest exercising more patience before making a decision.

At Investropa, when we create articles or update our pack of documents related to the real estate market in Latvia, we facts and data that are backed by evidence, not just opinions or rumors.

We have collected and examined all the official reports and statistics from government websites. Based on this extensive research, we have compiled a complete and reliable database. Here's what we discovered, which can assist you in deciding whether now is the right time to purchase real estate in Latvia.

Let's get started!

How is the property market in Latvia these days?

Latvia remains, today, a very stable country


Stability should always be the leading factor to consider when you want to invest in real estate because it minimizes risks and provides a secure foundation for your investment. It is an information you need as a foreigner who might buy a property in Latvia.

You most likely already know that Latvia is widely known for its remarkable stability. The last Fragile State Index reported for this country is 42.8, which is an impressive number.

Latvia has a strong commitment to democratic principles, which has helped to ensure political stability and economic growth. Additionally, the country has a well-developed infrastructure and a highly skilled workforce, which contribute to its economic stability.

Stability check done. Now, it's time to review the economic forecast.

Latvia is poised for strong growth


Before investing in Real Estate, assess the stability of the country's economy.

As projected by the IMF, Latvia will, in 2023, grow by 0.4%, which is not much. For 2024, the experts say 2.9%.

However, this modest figure is only temporary, as Latvia's economy is expected to increase by 11.6% during the next 5 years, resulting in an average GDP growth rate of 2.3%.

The expected sustainable growth rate in Latvia is beneficial for someone wanting to invest in real estate in the country because it indicates that the economy is stable and there is potential for long-term growth, which could lead to increased property values.

That said, GDP growth is just one piece of the puzzle!Latvia gdp growth

Latvian business owners show concern regarding the economy


It's worth considering the GDP forecast, but it's important to remember that it's created by an international organization (the IMF), so it may not fully reflect the opinions of Latvians regarding their local economy Luckily, in Latvia there is an official metric that is regularly reported. We're lucky because this isn't true for every country.

The Business Consumer Index (BCI) is a metric derived from surveys and assessments of business leaders, indicating their confidence in the current and future economic conditions.

The Central Statistical Bureau of Latvia reports that the Business Confidence Index has reached a value of -6 for Latvia. It's a score that can be qualified as "concerning".

A year ago, business operators were not very confident either. The BCI score was at -3.

This lack of confidence among local businesses in Latvia can have implications for individuals looking to buy property. It may result in a sluggish property market, with reduced investment and slower property price growth. Buyers might face limited options in terms of available properties and potentially encounter challenges in finding motivated sellers or suitable financing options.

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Latvia is dispensing a lot more building permits


When considering whether to buy property in a country, it's worth taking note of the number of building permits issued. A rise in the number of building permits being issued demonstrates faith in the property market, pointing towards a positive trend.

We have excellent news to share with you: the number of building permits delivered is booming in Latvia.

Over the last 12 months, according to Central Statistical Bureau of Latvia, the number of building permits issued by the Latvian municipalities rose by 20.3%, from 3,387 to 4,076 units.

Definitely, the data tells us that many people believe it's a favorable time to invest in real estate.

Keep in mind, however, that the domestic market will see an increase in the availability of real estate. Taking this into account, there is a chance that property prices will drop in Latvia in 2024.

Latvian property market shows sustained and exponential growth


Latvia's home prices have increased by 56.6% in 5 years according to eurostat.

It means that if you had bought a city apartment in Riga for $400,000 five years ago, then it would now be worth around $626,000.

Recently, the Latvian property market has been characterized by a consistent and increasingly rapid growth trajectory, with property values and market activity continually on the rise.

If you're thinking of buying a property in Latvia, it's a good sign. The market is active and getting stronger. However, you might want to wait a little longer for prices to go down before making your investment, so you can get a better deal.

You can find a more detailed analysis of the real estate prices in our property pack for Latvia.Latvia housing prices real estate

Everything you need to know is included in our Latvia Property Pack

Latvia's population is getting richer


When you're looking to buy real estate, population growth and GDP per capita deserve careful consideration because:

  • a growing population means more people needing homes
  • a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)

In Latvia, the average GDP per capita has changed by 8.9% over the last 5 years. It's a solid number.

This means that, if you purchase a stylish apartment in Riga and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.

If you're considering purchasing and renting it out, this trend is a good thing. Then, there might be an increase in rental demand in Latvian cities like Riga, Daugavpils, or Liepāja in 2024.

Rental yields are not crazy in Latvia


If you're wondering if a property investment will make money, consider the expected rental yields.

Rental yield is the percentage of the property's value that you can expect to earn in rental income each year.

According to Numbeo, rental properties in Latvia offer gross rental yields ranging from 2.8% and 5.5%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Latvia.

It means that the income potential from a real estate investment is relatively moderate.

Moreover, as we have seen before, there might be a fall in property prices (due to an increase in supply) and more wealthy tenants. Consequently, gross rental yields will probably climb in Latvia in 2024.

Latvia rental yields

Everything you need to know is included in our Latvia Property Pack

In Latvia, inflation is projected to remain moderate


Inflation is the erosion of the value of money.

It's when your customary cup of Riga Black Balsam costs 4 euros instead of 3 euros a couple of years ago.

If you're contemplating investing in a property, high inflation can offer several advantages:

  • Property values have a tendency to increase over time, potentially leading to capital appreciation.
  • Inflation can result in higher rental rates, thereby increasing the cash flow from the property.
  • Inflation reduces the real value of debt, making mortgage payments more affordable.
  • Real estate can act as a hedge against inflation, effectively preserving the value of the investment.
  • Diversifying into real estate provides stability during inflationary periods.

As projected by the IMF, over the next 5 years, Latvia will have an inflation rate of 14.2%, which gives us an average yearly increase of 2.8%.

This data shows that Latvia might experience inflation soon, so it's worth thinking about buying property now.

Is it a good time to buy real estate in Latvia then?

Now it's time to draw our conclusions.

2024 presents a compelling opportunity for property investment in Latvia, supported by a robust set of favorable signals that highlight the country's attractiveness to potential investors. Latvia's reputation for stability is a significant factor, offering a secure foundation for real estate investments and minimizing potential risks associated with economic and political volatility.

The country's anticipated strong growth prospects position Latvia as an appealing choice for property investment. As the nation embraces growth initiatives and economic expansion, property values may rise, potentially leading to capital appreciation and sustained returns for investors.

The increased issuance of building permits in Latvia underscores the government's commitment to fostering property development. This opens up avenues for investors to explore various real estate opportunities, ensuring a dynamic market that aligns with the country's growth goals.

The sustained and exponential growth in the Latvian property market further bolsters the case for investment. This trend suggests a high demand for real estate and potential capital appreciation, making it an opportune time for individuals seeking to tap into the growing property market.

Although neutral signals such as moderate rental yields and inflation are present, the overall investment landscape remains favorable. The concerns among Latvian business owners are balanced against the strong stability, growth potential, property market growth, and increasing population wealth. Collectively, these factors make 2024 an auspicious year to consider property investments in Latvia.

We hope this article has offered you practical support!. If you need to know more, you can check our our pack of documents related to the real estate market in Latvia.

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

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