Latvia

Sandwiched between Estonia, to the north, and Lithuania, to the south, Latvia lies at the geographical heart of the Baltic states. Its capital, Riga, is also one of the largest cities in northern Europe, with a population of more than 700,000. Over the last few years, Riga has seen some of the most spectacular rises in property prices in Central and Eastern Europe: average values in Riga’s Old Town and city centre increased two to three fold between 2000 and 2004, with slightly smaller rises in the suburbs. Some analysts have characterised the market as a bubble threatening to burst. For others such rapid price rises are the result of the strength of the Latvian economy, which has been growing by as much as 8.5% a year. An important role has also been played by the rapid expansion of the mortgage market. Foreign investors can easily obtain loans, with local banks offering as much as 90% loan-to-value (and maybe more) at rates below British levels. A word of warning: new build flats in Latvia are typically sold as “grey”, which means the floors, walls and ceilings must be decorated, and inner doors, windowsills, kitchen and bathroom installed. Depending on finish, this could cost as much as 20% to the total cost.

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