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Wednesday 24.01.2018 | Name days: Krišs, Eglons, Ksenija
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Growth of construction costs exceeds that of prices of private houses

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUFollowing the rise in activity in the private houses sector, the total number of deals involving private houses has increased by 2.7% in Riga and Pieriga. A positive tendency has also been noticed in the construction of private houses, where, compared with the three quarters of 2013, a 5.5% increase in the number of issued construction permits has been noted, according to an outlook on the private houses market compiled by Arco Real Estate.

The company’s CEO, Māris Laukalējs, reveals that the increase of activity is not reflected in any significant price changes, because the overall price level remains on the level of the previous year. The only sector that has suffered significant changes is that of exclusive private houses: in Riga and Pieriga there has been a decline in interest and subsequently in the number of deals with such properties. This has resulted in a decline in prices in this sector.

Observations show that the highest demand was noted for quality private houses situated in Riga and built in the past two decades, with optimal area (150 – 250 m2). In addition to an increase in demand and slight increase in prices, this particular sector has also experienced limited supply, explained the expert.

In the past three quarters of 2014, there has been a 0.8% increase in construction costs, which is similar to 2013, when the total annual increase was 1.2%. In spite of the fact that this increase was not significant, it did nonetheless exceed the growth of prices of private houses, which resulted in the development of private houses and cottages even less attractive, comments Laukalējs.

Even though the average number of deals with private houses in Riga was 16.6% smaller than the previous year, it did not show any sign of decline of prices for private houses. The reduction of the average amount can be explained with the significant decline in the number of deals with exclusive houses, as concluded in the outlook by Arco Real Estate.

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