The start of 2025 has been marked by a sharp rise in activity on the housing market – both prices and the number of transactions are increasing. According to OECD data, the average Latvian household would currently have to work 9 years to buy a 100 m2 home, putting every euro earned into the piggy bank and making no unnecessary purchases at all. Twelve years ago, by contrast, a household would have had to work 9.6 years. Over the past two years, incomes in Latvia have grown considerably faster than housing prices, and given the dynamics of the market this favourable situation will not last for ever – right now may well be the last, comparatively favourable, window for those planning to buy a property to live in or as an investment.

“Home Buyer Confidence Index”* figures for June:

·                    56 days – the average time needed to sell a home at the market price (57 – in May; 58 – in April; 60 – in March; 58 – in February; 60 – in January);

·                    15% of homes were sold within one month of the listing being published (14% – in May; 14% – in April; 13% – in March; 14% – in February; 14% – in January);

·                    15% of sellers asked a price disproportionately high for market conditions (15% – in May; 14% – in April; 14% – in March; 15% – in February; 15% – in January);

·                    1% of buyers offered a higher price than the one stated in the listing (0% – in May, 0% – in January);

·                    20% of transactions** in Riga involved homes in new developments (22% – in April; 25% – in March; 25% – in February; 20% – in January; 22% – in December; 22% – in November; 17% – in October).

Looking at other European countries, to buy a 100 m2 home a household in Finland would have to work 6.6 years, in Lithuania – 7.5, and in Estonia – 10.3, making no unnecessary purchases such as travelling, eating out or going to concerts, and instead putting every euro saved towards buying a property. In Ireland and Luxembourg – more than 16 years. “At the moment, wage growth has outstripped the pace at which housing prices are rising. That is a positive signal not only for buyers, but for the stability of the market as a whole. Yet the trends at the start of 2025 show that prices are beginning to climb again, and this affordability ‘window’ may not be here to stay,” comments Latio real estate analyst Ksenija Ijevļeva.

Latvia has seen sharp income growth over the past two years: the average gross wage rose from EUR 1,462 in the first quarter of 2023 to EUR 1,757 at the start of 2025, an increase of +20%. The average price of a two-room flat in a new development on the primary market in the Riga neighbourhoods, meanwhile, stood at EUR 2,535/m2 in Riga in the first quarter of 2025, a 9% increase on the first quarter of 2023. Housing prices have therefore risen far more moderately over this period. There are already signs in the market that property prices could start rising faster, so the relative ability of residents to buy a property is beginning to come under pressure.

According to 2024 Eurostat data, the average age at which young people in Latvia leave the nest, that is, their parents’ home, is 26.6, compared with 28.1 in 2010. This suggests that young people have become more independent, and that a growing number of them choose to rent rather than buy their first property when they move out. In Estonia, young people move out of their parents’ home at 22.4 on average, and in Lithuania at 23.6.

Research shows that the sooner a couple acquire a home of their own, the sooner they become parents. In Latvia, a first property is bought at the age of 32 on average. Ironic or not, the average age of a mother at the birth of her first child in Latvia is 28.1 – a point at which people are often caught between the status of tenant and owner. Housing affordability is therefore not merely an economic question: it also shapes the country’s demographics.

“There is a saying: if you want to save your child 10 years of their life, help them buy a home. In Latvia there is data to back that up. Latvia’s housing affordability ratio – the Home Price-to-Income Ratio – currently stands at 9. That means the average household would have to work 9 years to buy a home at the market price, spending nothing on anything else. This figure is not the highest in Europe, but it still has a range of significant consequences, both social and economic. On the one hand, a high ratio can indicate that the property market is fairly active and that there is demand for housing in Latvia’s cities, particularly in Riga. That attracts investors, stimulates construction and helps the rental market to develop. The real impact on people, however, is less encouraging. Young families and first-time buyers find it harder to save for a deposit or to obtain a loan. As a result, starting a family, having children and settling into a stable life are all delayed. This situation can also deepen social stratification, because where the ratio is high, property is more often seen as a privilege than as an attainable goal,” says Latio real estate analyst Ksenija Ijevļeva.

* So that people are better informed about the current situation on the property market, Latio publishes a “Home Buyer Confidence Index” each month, bringing together the five indicators that best characterise market conditions over the previous month.

** Data on transactions registered in the Land Register in May