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Market overview: Private houses in Riga and its surroundings, 1st half of 2023

  • Authors of the market review: "ARCO REAL ESTATE" board member, head of the valuation department Māris Laukalējs and valuation specialist, analyst Jānis Dzedulis.


Single-family private houses

 

In the first half of 2023, activity in the private house market in Riga and its surroundings decreased: compared to the second half of 2022, the total number of private house transactions decreased by 29% (in 2022, the number of transactions decreased by 23%). On the other hand, compared to the first half of 2022, 16% fewer private house transactions were registered in this time period this year. The number of transactions decreased the most in the vicinity of Riga.

 

In Riga, private house prices decreased - in the first half of the year, transaction prices decreased by an average of 5%. On the other hand, the prices of private houses in the vicinity of Riga had an upward trend. In the first half of this year, the prices of private houses in the vicinity of Riga increased by an average of 2%. In 2023, the demand for all types of private houses in the vicinity of Riga decreased in all price ranges, which is evidenced by the decrease in the number of transactions. The number of transactions with expensive and exclusive private houses, the price of which exceeds 300,000 euros, also decreased. Compared to the year 2022, the number of transactions with such houses decreased both in Riga and in the vicinity of Riga. The highest price in private house transactions in the first half of 2023 was lower than last year in the vicinity of Riga, but in Riga it was higher than the previous year.

 

Compared to the year 2022, the activity in the construction of new private houses has not decreased this year - in the 1st quarter, 20% more building permits were issued than in the same period last year. Compared to the 4th quarter of 2022, the number of building permits is only 3% lower. The number of building permits issued last year was generally lower than in 2021.

 

In 2023, single-family residential houses were mostly built for their own needs, and the construction of private houses with the aim of selling them later has decreased significantly recently due to the increase in construction costs.

 

According to the data of the Central Statistics Office, the construction costs of residential buildings continued to increase in 2023 as well. Compared to Q1 2022, construction costs for new buildings increased by 6% during the year.

 

Taking into account the rise in construction costs, private house prices rose last year. This could be clearly observed in the Riga region. In 2022, the increase in the prices of private houses in the vicinity of Riga significantly exceeded the increase in the prices of construction costs. At the beginning of this year, construction costs tended to decrease (-0.4%), but despite this, private house prices continued to increase (+2 %).

 

Private houses in Riga

 

In the 1st half of 2023, changes were observed in the Riga private house market: compared to the 2nd half of 2022, the number of transactions decreased by 15%, while compared to the 1st half of last year, the number of transactions was lower by 29%. Meanwhile, private house prices fell slightly in the first half of 2022. In the first half of this year, the prices of private houses in Riga decreased by an average of 5%.

 

In recent decades, the number of transactions with newly built private houses in Riga was still relatively small - approximately 28% of the total number of registered transactions. Compared to 2022, the number of transactions with newly built private houses in Riga has slightly increased. New buildings in Riga have been built mainly for own needs of the owners, and they have been rarely offered for sale.

 

35% of transactions with private house in Riga still took place within the price range of up to 50,000 euros - in this price category, a large share was made up of small private houses and garden houses in Dārziņi. The majority of transactions with private houses in Riga (77%) took place in the price range of up to 200,000 euros. For larger amounts, the number of transactions was significantly lower.

 

Compared to 2022, the number of private house transactions for an amount above 300,000 euros has decreased this year. Only 11 such transactions were registered in the first half of the year, which is only a third of the volume of transactions in 2022.

 

During the first half of the year, only two private house transactions over 700,000 euro were registered (in previous years, 2-6 transactions per year). The highest price in a private house transaction in Riga in the first half of the year was registered in the centre of Riga, on Stabu Street (2,400,000 euro). It should be noted that in 2022 the highest amount of a transaction was 830,000 euro, and in 2021 – 1,473,650 euro.

 

The most popular private house districts of Riga according to the number of transactions in the first half of 2023: Dārziņi (20), Bieriņi (17) and Imanta (9). 33% of the total number of transactions took place in these districts. In other Riga neighborhoods, there were less than eight transactions during the first half of the year.

 

The cheapest and in terms of number of transactions the richest district of private houses in Riga, similar to other years, was Dārziņi. In this area, there were many transactions with summer or garden houses, and the transaction amounts were relatively low. In the first half of 2023, the average price of a transaction in Dārziņi decreased (-30%). The number of transactions with private houses in Dārziņi, in which the selling price exceeded 100,000 euros, decreased. If there were a total of eight such transactions in 2022, only three such transactions were registered in the first half of 2022. In the middle of 2023, the cheapest private houses in Dārziņi cost from 40,000 euros, while the prices of private houses on offer exceeded 200,000 euro.

 

In Bieriņi, the second richest district of private houses in Riga in terms of number of transactions, prices exceeded the 400,000 euro mark in several transactions. Also in terms of the average price of transactions, Bieriņi ranked second after the centre of Riga.

 

In 2023, the highest (average) price of private house transactions was in the centre of Riga (370,783 euro). A relatively high average price of private house transactions was observed in Bieriņi. In other districts of private houses in Riga, the average transaction price was below 200,000 euros. In several relatively expensive residential areas, such as Berģi, the recorded transaction prices were low, and the average transaction price did not reflect the true price level in these neighbourhoods In Dārziņi, the richest district of private houses in Riga in terms of number of transactions, the average price of transactions was the lowest (40,038 euro).

 

Analysing the structure of transactions by the area of private houses, it can be concluded that the largest proportion was still made up of private houses with an area of 50 to 100 m². The largest number of private houses of such areas were sold in Imanta. The number of private house transactions in the 100 to 150 m² area category was also high, namely 17% of the total number of transactions. The largest number of such houses was registered in Bieriņi in the first half of the year. Relatively many transactions with private houses also took place in the area of 150 to 200 m². In this area category, the most transactions took place in Vecdaugava.

 

In the area category up to 50 m², small houses in Dārziņi, which can only be used in the summer season, have been sold the most. These were mainly houses built in the Soviet time in Dārziņi, as well as in other districts of private houses in Riga.

 

The most popular private houses with an area of up to 200 m² accounted for 60% of the total number of transactions. Private houses with an area of more than 220 m² made up a significantly smaller proportion (26%), which was similar to what was observed in previous years. On the other hand, the volume of transactions with houses whose area exceeded 350 m², compared to 2022, was similar - around 7% of the total number of transactions (a total of 26 such transactions were registered in 2022). Transactions with houses of such a large area took place in Bieriņi, Mežaparks, as well as in other neighbourhoods. In the first half of 2023, no private house with an area exceeding 500 m² was sold. For comparison: six such transactions were registered in 2022.

 

Private houses in the vicinity of Riga

 

In 2023, the activity in the private house market in the vicinity of Riga decreased. According to the transaction data of the State Land Service, the number of transactions in the 1st half of 2023 was 32% less than in the 2nd half of 2022, and 12% less than in the 1st half of last year. As a result, the number of private house transactions this year will probably be the lowest in recent years.

 

The main factors affecting the price of private houses were location, public utilities, public transport availability, used building materials and interior decoration. The prices of private houses tended to increase in the 1st half of the year, however, the price increase was not as pronounced as in 2022. The decrease in demand in the market was affected by the increase in the cost of loans, given that the European Central Bank continued to increase the main refinancing operation. In the first half of 2023, private house prices increased by an average of 2%. The average price of transactions increased to 702 EUR/m².

 

Most of the transactions with private houses in the vicinity of Riga still took place for an amount of up to 50,000 euro. In the first half of 2023, they accounted for 46% of the total number of transactions. In 2022, about half of transactions also fell into this price category. The subjects of transactions were mainly small private houses and garden houses in former horticulture cooperatives in Olaine, Ropaži, Ķekava and Saulkrasti municipalities. The number of private house transactions was also relatively high in the price range from 50,000 to 100,000 euro. In this price range, the most transactions took place in Saulkrasti and Ādaži municipalities.

 

Significantly fewer transactions took place in the price range from 100,000 euro. 38% of all transactions are registered in this price category. On the other hand, the number of transactions of private houses, the amount of which exceeded 350,000 euro, decreased in 2023. In this price category, 11 transactions were registered in the vicinity of Riga this year, while in the second half of last year there were 20 such transactions. There were many houses on offer at such high prices, but this year it was more and more difficult to find buyers for such houses.

 

The number of transactions of exclusive private houses (worth over 500,000 euro) decreased in the first half of the year. Last year, 12 such transactions were registered, but only three in the first half of this year. On the other hand, only one transaction this year exceeded the limit of 700,000 euro.

 

The highest price in private house sales in the vicinity of Riga in the first half of 2023 reached 730,000 euro. The transaction took place in Mārupe, Mārupe municipality, however, it was a rather low price when compared to 2022 and 2021 (in 2022, the most expensive transaction exceeded two million euro). Also in the last decade, the highest price in private house transactions was recorded in 2022. Other most expensive transactions with private houses in the first half of 2023 mostly took place in Mārupe and Ropaži. Exclusive private houses built in recent years with high-quality interior decoration prevailed in transactions over EUR 400,000.

 

The highest prices of private houses in 2023 were found in Mārupe municipality, where transaction prices reached 550,000 euro. In terms of transaction prices, the second most expensive place in the vicinity of Riga was Ropaži municipality, where the prices of private houses reached 435,000 euro. On the other hand, the lowest prices were observed in Saulkrasti municipality, where they reached 225,000 euro.

 

The number of transactions in the largest municipalities around Riga in the first half of 2023 was different. Proportionally, the largest number of transactions was in Olaine municipality (19%), where transactions mostly took place with living houses in former horticulture cooperatives.

 

Relatively many transactions took place in Ropaži and Ādaži municipalities (14%). These municipalities have a smaller proportion of garden and summer houses. In the most expensive municipality in the vicinity of Riga - Mārupe municipality - 11% of transactions took place. On the other hand, proportionally, the fewest transactions among the municipalities around Riga took place in Salaspils municipality - 8% of the total number of transactions.

 

In the first half of 2023, the number of private house transactions decreased in general. Compared to the second half of 2022, the number of transactions decreased in all municipalities around Riga.

 

The number of transactions decreased the most in Ādaži municipality. On the other hand, changes in the number of transactions least affected Olaine municipality, where the number of transactions decreased by only 2% this year. In 2023, also in terms of the number of transactions, Olaine municipality was the richest, where 95 private house transactions took place during the first half of the year. The fewest transactions took place in Salaspils municipality - 39 private house transactions were registered there during half a year.

 

In 2023, the most transactions took place with private houses of a small area (50-100 m²) - the number of transactions made up 25% of the total number. The largest number of transactions with houses of this size took place in Olaine municipality, in the territories of the garden house cooperatives established in Soviet times. In the surroundings of Riga, private houses with an area of 150 to 200 m² also made up a large part (18%) of the total number of transactions. Therefore, it can be concluded that the most popular private houses in the Riga area were still between 50 and 200 m² in area. The number of transactions with private houses over 200 m² was relatively lower.

 

Exclusive area (over 350 m²) private houses in the surroundings of Riga were sold in a similar volume as in 2022. The share of such building transactions in the first half of 2023 was around 4% of the total number of transactions (4% in 2022 as well). In the 1st half of the year, the most transactions with private houses of this area took place in Ropaži and Mārupe municipalities.


16.08.2023.

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