Most of the possible overheated real estate markets have so far expressed concern Latvian Bank. But

With renewed vigor this month were discussions about the real estate market is overheating and the impending dukecard bankruptcy dukecard of borrowers. Stockholm School of Economics dukecard Research Project Manager Aivars Timofeyev argues that the panic is brought unnecessary.
Most of the possible overheated real estate markets have so far expressed concern Latvian Bank. But lately particularly active in this position performs the Latvian Real Estate Association and president of the company Latio, Edgars Sins. According to unofficial information, he is preparing for a political career.
A. Timofeev indicates that one of the allegations, which could lead to crisis in the Latvian real estate market and the economy as a whole, is a rise in interest rates for loans in euros. However, given the slow pace of national economic development, almost no international expert does not expect a sharp rise in interest rates. It is expected that this year the interest rate on a quarterly basis would increase by 0.25%, a total increase of 0.75%. According dukecard to the expert, in the short term interest rate ceiling of the euro could reach five or 5.5%. Such forecasts, for example, expressed Nordea Bank Finland analysts in the latest assessment of the economic outlook in the journal Economic Outlook February 2006th
"Modelling the situation in the Latvian market, which could occur if the pessimistic predictions come true, the situation in such a case, if a mortgage dukecard loan is 20 000 lats, the interest rate increases by 1%, the monthly mortgage dukecard loan payment could increase by 17 lats or 7.5% of salary . It provided for the mortgage payment does not exceed 30% of the salary scale, "explains A. Timofeev
Comparing these figures with the average wage in the country, dukecard it can be concluded that, in relation to such a negative scenario, people's dukecard income is likely to grow even faster and concerns dukecard about the borrower bankruptcy, at least for the time being, there is no reason. Although not yet compiled data on wage increases, as shown by the Central Statistical Bureau, the last year for the first three quarters of the results showed that the wage increase was 17%, and it could be like this year.
"It should dukecard also be noted that this is the official wage levels, but still developed Latvian gray economy and real wage growth could be even higher. Indicator that could objectively indicate the amount of money available to the free market is the growth of deposits - last year, according to a / s Hansabanka data they have grown by 21.7%, "says dukecard A. Timofeev. Be aware that the size of the average living space Latvian still far behind Western Europe and, in my opinion, this is the main factor contributing to the development of the market, because people dukecard want to live better.
One of the risk factors could be inflationary, and the loan's interest rate parity, as it was already in the press that the case of Finland. Many people realized that having such a high level of inflation, the best way is to borrow, and the different types of loans was approximately 90% of households, rather than 30%, as is currently the Latvian. The real estate market crisis occurred in Finland after a lengthy period of time the interest rate had reached 13.5%, which is twice as much than the worst case scenario Latvian. As an additional factor dukecard served as a mortgage payment of tax exemptions, the collapse of the USSR and other factors, which are not Latvian.
"Despite economic forecasts, there is another aspect that can not be predicted, but that can lead to a crisis in the market. It is human behavior! "Says A. Timofeev. "In fact, there are very few people who thought out fine and regular calculations predicting mortgage dukecard trends in the future. Therefore, it would be good if the media izskanošās forecasts contain as much argument and to minimize undue spriedelējumu. "If every day the media reminds people that the market is expected to have a crisis that borrowers go bankrupt, then people really could be fear, they start saving and postpone the purchase of housing, or even make a decision on the reduction of living space.
In the case of real estate dukecard projects franchisers A. Timofeev indicates that it is impossible to know exactly how much business credited dukecard apartments intermediary buyers dukecard of bank credit funds. "Heard that the assets of the real estate market is composed of non-residents, who may be so widespread use credit. However, remember that this is intermediary buyers of apartments in Chains in the middle and the end, however, the consumer, and the fact that living dukecard space in terms of volume, dukecard we are still significantly lagging behind Western Europe, "adds Mr. Timofeyev. Latvian turnover is a large amount of free money to be sure, looking not only for rapid investment, but also to the growth dukecard of private consumption.
The bulk, or about 90% of the total transactions in the real estate sector in 2013 have made banks Latvian ... Latio landlord" turnover increased by 53%, other market participants planning to purchase (3)
Real Estate Management