Lativa property in decline

Latvia property boom over as inflation numbers continue to grip the country.

Latvia's past housing boom, especially that of 2006, saw investors doing very well. Today's market seems to be flattening out and investors are often left with the inability to make key investments happen.

The demand for property in many of the Baltic States has been high and because the countries are so small and have seen a great interest, many developers and investors have found them to be an ideal investment area. Banks have provided easy credit to borrowers looking to invest here.

Latvia has many concerns including an economy that is facing a likely slowdown due in part to the overall increase of inflation here. The European Union Finance Ministers placed a key warning on the country that it needs to cut the costs including spending. Measures need to be put in place to lower inflation as well. Not doing so, says the EU, will cause an "abrupt slowdown."

Latvia's government is working on this. They are hoping that the slowing of consumer demand will help to drop the country's growth to 6.8% before 2010.

Inflation in Latvia topped 15.8% in January. This was the fastest rise of any of the EU countries, which has proved to be worrisome.

Reported by Bloomberg News, The European Commission had this to say: "Some slowdown has become visible in the housing market and in domestic consumption, but insufficient to remove the downside risks of a potential hard landing."

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