August real estate numbers

Balsts real estate company reports that apartment prices in Riga decreased by another 2.9% in August. The housing prices are now 12% below the peak level of April 2007 (but still a lot higher than in a year or two ago). People in Riga say that one recently finished highrise has all windows dark (meaning nobody is actually living there). Developer's website for that highrise shows 25% of apartments as sold or reserved and 75% still available.

Balsts predicts another 3-5% decrease in prices in the next 2 months, followed by stabilization. I expect a bigger decline.

July lending data are out, under the headline "Home loans increase by 75.6% in a year". Monthly data show a different picture, however. The home loans increased by 107 million lats (153 million euro) in July which is considerably less than 140 million lats/month increases in April-June and much less than 187 million lats/month in January-March. The banks are getting worried about the overheating economy and the possible housing bubble and are cutting back on new loans.

At some point, this should result in slowing down the rest of economy, as well. But for now, there is no signs of that yet.