In relation to the possibility of purchasing a new home, Latvian residents view EUR 100,000 as the “pain threshold”. The critical border for new project apartments is 1,300 EUR/square meter. For standard apartments it is 1,000 EUR/square meter. For private homes it is 1,600 EUR/square meter, according to results of a study by PrivatBank.
Lately there has been a decline of demand for housing the price of which exceeds EUR 100,000. Only 10% of residents in search of housing are prepared to consider the possibility of getting a new home that would be more expensive than EUR 100,000. 33% do not want to pay more than EUR 40,000. 25% would pay EUR 40,001 to EUR 60,000 and 17% view housing price category from EUR 60,001 to EUR 80,000 as acceptable. Only 15% are prepared to spend EUR 80,001 to EUR 100,000 on a new home.
“In general, the largest amounts residents are prepared to pay for new housing in new projects. When it comes to standard apartments, however, residents are less prepared to pay much. For residents, the critical price threshold is 1,600 EUR/square meter. According to study results, only 8% of respondents are prepared to purchase more expensive homes. 28% of respondents said they would be ready to buy a house that was not more expensive than 700 EUR/square meter. 32% mentioned price range of 701 to 1,000 EUR/square meter; 20% of respondents mentioned 1,001 to 1,300 EUR/square meter and 12% mentioned 1,301 to 1,600 EUR/square meter,” study representatives reported.
Demand for new apartments rapidly declines if the price exceeds 1,300 EUR/square meter. Only 12% of respondents find prices that exceed 1,300 EUR/square meter acceptable. 35% of respondents would be prepared to pay up to 700 EUR/square meter. 33% mentioned price range from 701 to 1,000 EUR/square meter and 20% mentioned 1,001 to 1,300 EUR/square meter.
The critical price border for standard apartments is 1,000 EUR/square meter. It is harder to sell more expensive apartments in this segment. 32% of respondents would be fine paying 400 EUR/square meter, 34% are fine with 401 to 700 EUR/square meter and 22% find 701 to 1,000 EUR/square meter appropriate.
A total of 1,348 people participated in PrivatBank’s survey. (BNN/Business World Magazine)
