The majority of Latvian residents – 57% – believe it is now far more economical to buy a home rather than rent, according to a survey by Swedbank.
Only every tenth respondent believes it is better to rent a home. One-third of respondents had no opinion on this matter.
«From the bank’s perspective we see that the interest for housing loans increases stably year after year. We can conclude from several surveys that housing procurement is topical for 41% of society. Unfortunately, a relatively large part of residents remain unable to realize their plans because they cannot afford them. The main reasons include the relatively low savings level and purchasing power, as well as the negative influence coming from the grey economy. Loan availability for residents whose wallet situation is different from is seen on their bank accounts is very limited,» says Swedbank Private Financing Decision Centre’s manager Ainars Balcers.
The main argument in favour of buying a home, according to residents (72%), is that current monthly loan payment is equal or lower than rent pay. 67% mention that buying a home is a long-term investment.
According to survey results, residents who believe it is more economical to rent a home rather than buy, say that they have no confidence in their ability to take on long-term commitments (53%). Every third respondent says that current market prices do not represent housing quality sufficiently enough (37%) and that it Is hard to find appropriate housing (35%).
Data compiled by Swedbank shows that apartments in Riga remain the most popular choice for residents. Those apartments are significantly cheaper than apartments of the same size in new projects. On top of that, those apartments are often situated close to developed infrastructure. This choice also points to residents’ actual ability to save and borrow money to purchase a home – the average amount residents usually borrow is EUR 55,000 with repayment terms of 16 years. Most often home purchase is a choice made by residents aged 30 with average monthly income from EUR 1,000 to 1,500.
When asked what can help increase housing loan availability, residents primarily mentioned larger wages (59%), state involvement with support programmes (41%) and tax reliefs for loan takers (40%). Residents living in the countryside more often than others mentioned larger wages (67%). Townsfolk, on the other hand, more often mentioned state support (44%).
Balcers notes that the state support programme for families with children works well at the moment, helping families afford the first instalment. «The fact that nearly 40% of housing loans are issued as part of this programme also means that saving up money for the first instalment is a major obstacle for households. We believe state support is vital, and that this support programme should be made accessible to a larger range of people,» he says.