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The market of accommodation in Latvia

The overall political and economical situations were two main factors, that determined the tendencies of accommodation market development in 2004:

• The increase of the residents income level, which allowed to increase the monthly mortgage payment
• Low credit rates and liberal crediting conditions gave the opportunity to prolong the periods of crediting and to broaden the circle of the credit takers.
• Joining the EU - hopes and worries that the prices for the accommodation will increase
• The increasing polarization of inhabitants, that created the demand for the accommodation of different quality
• The decrease of the ASV dollar in comparison with other currencies, including EUR and
• LVL, caused the shift from traditional USD to EUR, this process was especially intensive at the end of the year, when the value of ASV dollar was lower. Very often sellers and buyers cannot follow the rapid changes of the currency course and often, when shifting to EUR the sum, that earlier was in dollars stayed the same, thus increasing the difference in prices between similar objects.

Because of the increase of prices the market of the accommodation became not only the market

of expenditures, but also the market of investments - residents buy accommodation as a kind of

investment.

Even though the 2004 started with a large offer of new projects, its real influence on the housing

market began only at the end of the year, when mediators - the buyers of the new projects began to sell flats to consumers. That caused the activeness of the secondary market.

Even though for the new projects were provided large publicity and liberal crediting conditions, the predominating segment are still standard serial flats.

In 2004 there was a rapid growth of prices for the accommodation and the increase of the amplitude of price in the frames of one district or one building type. At the several segments of market the prices became more stable - for the less prestigious accommodation the increase of price was lower and at the end of the year, taking into consideration the inflation, they factually became stable. In comparison with the last year the volume of deals with apartments increased for 20% and it is 16700 deals per year or in average 1380 deals per months. The mentioned increase in the quantity of deals is explained by the fact that with the purchasing of new projects and building private houses and with the change of accommodation the secondary accommodation market is filled with new accommodation.