Latvia’s Housing Prices Accelerated in 2025

Latvia recorded one of the sharpest quarterly increases in European Union housing prices during the third quarter of 2025. The initial estimate showed a 5.2% rise over three months and placed the country first in the EU. A later revision lowered the increase to 4.8%, moving Slovakia into the lead with 4.9%. Latvia’s annual growth rate was also revised from 8.4% to 7.9%, but remained above the EU average.

Latvia ranked among Europe’s fastest housing markets

LSM initially reported that Latvian housing prices increased by 5.2% from the second to the third quarter of 2025. This was the highest quarterly rate among European Union countries with available data. Slovakia ranked second at 4.9%, followed by Portugal at 4.1%.

The figure marked a sharp acceleration after a relatively moderate start to the year. Prices had increased by 0.9% in the first quarter and 3% in the second.

Quarterly and annual growth measure different developments. The initial annual estimate showed an 8.4% increase from the third quarter of 2024. Latvia was above the EU average, but well below the markets recording the strongest year-on-year gains.

Revised data changed the European leader

Eurostat subsequently revised Latvia’s third-quarter increase from 5.2% to 4.8%. Annual growth was lowered from 8.4% to 7.9%. Slovakia therefore moved into first place for quarterly growth at 4.9%, while Latvia ranked second and Portugal remained third at 4.1%.

Average prices increased by 1.6% during the quarter across the EU and by about 1.5% in the euro area after subsequent revisions.

The adjustment does not change the direction of the Latvian market, but it alters the international ranking. The description of Latvia as the EU leader was accurate for the preliminary January 2026 release but is no longer supported by the final data.

Housing price statistics are frequently revised when additional transaction records become available and national statistical offices update their calculations.

Existing properties rose faster than new homes

The Central Statistical Bureau of Latvia initially estimated that existing homes increased in price by 9.4% over the year, compared with 3.8% for newly built properties. During the quarter, existing housing rose by 5.6%, while new housing increased by 3.3%.

The difference indicates that completed properties were the main driver of the acceleration. Existing homes are available across a wider range of locations and prices and can usually be occupied immediately. New development is more exposed to construction costs, project supply and buyers’ ability to obtain larger mortgages.

The preliminary index showed that housing prices in the third quarter of 2025 were 120.7% above their 2015 level. New properties had increased by 123.9% over the decade, while existing housing was 118.5% more expensive.

The index measures average price change across transactions and does not mean that every flat in Riga, Jūrmala or a regional town appreciated by the same amount. Results vary by location, size, condition and energy efficiency.

European housing growth remained uneven

Following revisions, EU housing prices increased by an average of 5.4% year on year in the third quarter of 2025. The euro-area increase was about 5.2%.

Latvia’s 7.9% growth was above both averages, but considerably lower than the strongest markets. Hungary recorded an increase of about 20.9%, Portugal 17.7%, Bulgaria 15.4%, Croatia 13.8%, Slovakia 13.4% and Spain 12.8%.

Finland was the only EU market with a substantial annual decline, with prices falling by about 3.4%.

The wide range reflects differences in construction, household income, migration, housing supply and mortgage conditions. Central and southern European markets generally appreciated faster than the largest western European economies.

Prices continued rising at the end of 2025

Latvian housing prices increased by another 1.9% in the fourth quarter compared with the previous three months.

Existing homes gained 2.3%, while new housing prices declined by 0.3%. Year-on-year growth accelerated to approximately 11%.

The figures show that the strong third quarter was not immediately followed by a market decline, although the quarterly pace became considerably slower.

Latvia was no longer the quarterly leader. Slovenia, Hungary and Portugal recorded larger increases during the final three months of the year.

The market slowed in early 2026

Prices increased by 1.2% during the first quarter of 2026. Annual growth moderated to 5.5%.

New housing prices were broadly unchanged from a year earlier, while existing properties increased by 6.6%.

The decline in annual growth from approximately 11% at the end of 2025 to 5.5% partly reflects a stronger comparison base. It also indicates that the third-quarter surge did not become a permanent quarterly rate of around 5%.

One quarter is not sufficient to establish a sustained downturn. Demand remains sensitive to mortgage rates, household income and the number of properties available for sale.

Easier financing supported mortgage demand

Financing conditions improved during 2025 as euro-area interest rates declined and Latvian borrowers gained easier access to mortgage refinancing.

Latvijas Banka reported stronger household lending and a pronounced acceleration in mortgage activity. During the first five months of 2025, banks reduced their additional interest margin on 7,246 mortgage agreements, representing almost 11% of Latvia’s total mortgage portfolio.

Many Latvian mortgages combine Euribor with a fixed bank margin. Euribor is the reference rate at which major banks lend euros to one another. A decline reduces payments on variable-rate mortgages, while a lower bank margin provides an additional saving.

When financing becomes cheaper faster than developers can increase housing supply, part of the benefit may be capitalised into higher property prices.

The index is not the price of a typical apartment

The House Price Index measures changes in residential properties purchased by households. It includes new and existing flats, detached homes and terraced houses regardless of how buyers intend to use them.

It is based on completed transactions rather than asking prices. That makes it more reliable than an average of property advertisements, although the outcome is still influenced by the composition of sales.

A quarter with a larger number of expensive transactions can raise the simple average even when comparable properties have not appreciated by the same amount. Statistical methods reduce this effect but cannot remove every difference in market composition.

The index also does not show how many square metres a household can afford or the deposit required for a mortgage. Affordability must be assessed using income, financing costs, taxes and maintenance expenses.

Higher prices do not resolve Latvia’s housing problems

Rising property values increase the wealth of existing owners but raise the entry cost for households without real estate.

Latvia remains one of the EU countries with the highest proportion of people living in overcrowded homes. The rate stood at 40.9% in 2023, compared with an EU average of 16.8%. Overcrowding is measured using the number of rooms available relative to the number, ages and composition of household members.

A high homeownership rate does not automatically guarantee a modern or adequate housing stock. A large share of Latvian apartments is located in buildings constructed during the Soviet period and requiring insulation, replacement of engineering systems and major repairs.

Higher valuations may improve owners’ ability to borrow against their property, but they do not automatically create additional housing or upgrade ageing apartment blocks.

As International Investment experts report, Latvia experienced a genuine acceleration during the second half of 2025, but the claim that it led Europe was based on preliminary figures. Following revisions, Slovakia took first place, while Latvia retained the second-highest quarterly increase. The more important signal was the faster appreciation of existing housing and stronger mortgage demand alongside limited new supply. Sustainable growth requires construction and household incomes to rise as well; otherwise, lower borrowing costs will primarily support prices rather than housing affordability.

FAQ on Latvian housing prices

How much did Latvian housing prices rise in the third quarter of 2025

The final estimate shows a quarterly increase of 4.8% and annual growth of 7.9%. The preliminary figures were 5.2% and 8.4%.

Was Latvia the fastest-growing EU housing market

It ranked first in the initial release. After revision, Slovakia led quarterly growth with 4.9%, while Latvia ranked second.

Which increased faster, new or existing housing

Preliminary national data showed stronger growth in existing homes. They increased by 9.4% annually, compared with 3.8% for new properties.

Why are housing statistics revised

Additional transaction records become available and statistical offices update or correct their calculations. Final figures may therefore differ from preliminary releases.

What does the House Price Index measure

It measures changes in residential properties purchased by households. It covers new and existing homes but does not directly measure affordability.

Did prices continue to rise at the end of 2025

Yes. Prices increased by 1.9% in the fourth quarter and by approximately 11% from a year earlier.

What happened in early 2026

Quarterly growth slowed to 1.2% and annual growth to 5.5%. Existing homes continued to rise faster than new properties.

Why do mortgage rates affect housing prices

Lower financing costs reduce monthly payments and allow buyers to bid for more expensive homes. When supply is limited, additional borrowing capacity can raise prices.

Does rising property value mean the housing market is improving

Not necessarily. It benefits owners but makes purchasing more difficult for households without property. Affordability depends on prices, income, interest rates and housing construction.