The crisis of 2008-2010 has fundamentally shaken the faith of Latvians in crediting in general and in mortgaging in particular.
Self-reliance and painstaking debt evasion – such approach led to the change of priorities in the potential house and apartment owners. A villa at the sea for a conditional million remained in pipe dreams, nowadays the residents of Latvia choose more pragmatic goals – there is a growing demand for housing up to two rooms with completed interior finishing at the price up to 70KEUR or for three-room apartments worth of up to 90KEUR.
To be fair, such trend is observed nowadays also in many countries worldwide. Not because of lack of money. Rather, this is the trend of fashion.
The point at issue is about cutting of costs, as well as about functionality of housing and new concepts, which can make it affordable to a large number of people. All new is well overlooked old: co-housing comes into fashion. Or, if you like, living in communal apartments.
In Denmark nowadays about 10% of households live exactly this way. The number of households consisting of one person, which are commonly referred to as “1 person + a dog”, is growing. People become more mobile, they want to live in the centre of a city, but the role of a private room becomes smaller.
As the consequence, in the world there is an increasingly growing demand for small flats of 25 – 35 square meters, but in the USA even smaller, about 16 square meters. This is associated with changes in the life style, when people tend to socialise more beyond the walls of their homes, as well as for economic reasons – to make housing cheaper in use.
Of course, changes won’t be quick, a villa at the sea may continue to be the peak of dreams of the majority of the inhabitants of the planet. But the new generation has other values, which would stimulate changes in the realty market as well.
In Latvia, the minimalism in the realty sphere is furthered by a trivial desire to cut down costs rather than by a suddenly appeared desire to socialize with the outside world. Where over 60% of income is spent to pay for housing, people with ever increasing frequency wonder is it worth to be a slave of own real property?
In fact, the answer to this question was found a long time ago in Germany, where 85% of real property belongs to large companies, and apartments, mostly, are rented. In Scandinavia, one of types of rent becomes more and more popular – leasehold estate.
The Latvians, seems, move in this direction. To solve the housing problem quickly and dramatically it is not necessarily to buy a house or a flat. It is much quicker and more convenient to do that by renting the housing you like.