Latvian Property Prices Rise 11% Despite Weak Economic Conditions

Latvia’s residential property market continued showing strong momentum at the beginning of 2026 despite broader economic softness and slower regional growth conditions. According to newly released housing data, Latvian dwelling prices increased by 11.0% year-on-year in the fourth quarter of 2025, making Latvia one of the fastest-growing residential property markets in the European Union during the period.

The figures highlighted the resilience of the Latvian housing sector at a time when many European markets were still adjusting to higher financing costs, inflation pressure, and weaker consumer confidence. While the wider EU recorded average annual house price growth of 5.5% during the same period, Latvia’s market expanded at nearly double that pace.

Existing apartments and secondary-market residential properties were the primary drivers behind the increase, recording significantly stronger annual growth than newly built units. Market activity remained concentrated around Riga and several surrounding urban districts, where limited modern housing supply, rising construction costs, and continued demand for quality residential assets continued supporting prices.

The data also demonstrated that Latvia’s housing market was becoming increasingly disconnected from short-term macroeconomic weakness. Although the country experienced a relatively soft economic environment during parts of 2025, residential property values continued benefiting from structural factors such as limited new supply, gradual wage growth, and improving long-term financing expectations.

Another important factor supporting the market was the gradual improvement in borrowing sentiment as EURIBOR pressure began stabilizing. During previous years, high European interest rates significantly reduced affordability across the Baltic region. However, by early 2026, investors and residential buyers increasingly expected financing conditions to improve, helping restore confidence in the property sector.

The performance of Latvia’s real estate market also reinforced the growing importance of Riga as a relatively affordable European capital compared with many Western and Southern European cities. International investors continued monitoring the market due to lower entry prices, euro-based assets, and Latvia’s position within the Schengen Area.

At the same time, the market became more quality-focused. Buyers increasingly prioritized renovated apartments, energy-efficient buildings, and modern developments with lower operating costs. Older non-renovated Soviet-era housing stock continued facing greater pressure in terms of liquidity and long-term competitiveness.

Despite ongoing economic uncertainty across parts of Europe, Latvia’s residential sector entered 2026 with stronger-than-expected momentum, positioning the country as one of the more resilient housing markets in the Baltic region.