The new residence permit law in Latvia, which entered into force on 1 September 2014, has caused a jump in prices for local housing market, according to some experts, reports ee24.com with reference to the Latvian media. In particular, Maris Laukalējs, Director of realty company Arco Real Estate said that the real estate market in Latvia offers today many apartments for inadequate prices if taking into account their condition. This is caused by the desire of many developers and apartments owners to "drag" its value to the required level.
So far, a problem of apartments purchased at a price exceeding the old price threshold, virtually didn’t exist in the capital. In 78% of cases, the cost of apartments in new buildings in the central districts of Riga exceeds €143,000. It was formed primarily as a result of a large square footage, as 1 "square" of housing in the new home in the center costs an average €2,600 and in other capital areas – €1,410. If we talk about the whole city, the purchase price exceeded the threshold in 19% of the cases, which was also a good indicator.
However, the new law will change the situation dramatically, believe realtors. If we start from a new price level, it was not exceeded in July 2014 by any buyer. Obviously, such a tightening of immigration policies will affect not only those who want to move to the country, but also the Latvians themselves. If housing prices exceed the allowable limit, it will cause market overflow (a trend that is already observed) with illiquid housing. This may be followed by the bankruptcy of developers and the weakening of the economy.
Lets’ recall, that new law on obtaining residence permit in Latvia acts since September 2014. Price threshold allowing residence in the country has increased from €143,000 in the capital / €71,500 in the regions to the common country level of €250,000. Besides, it is necessary to pay another 5% state tax and the whole amount must be paid for one object; purchase of several real estate items with a joint value exceeding €250,000 will not be considered (see. more: 5 hidden pitfalls of the new residence permit in Latvia).