While many countries seemed to be just beginning their ride to the top in property markets, some drops have investors concerned about the likelihood of investment benefits in several Baltic countries.
For example, in three of the most important (to the property market) countries, residential housing prices have slipped for the last few months.
For example, in Tallinn, apartments are falling in price, down 10 to 15 per cent. In Riga, property values fell by 10 per cent.
The problems surrounding these regions are quite simply based on the value of property based on the income of those residents. For example, in Latvia, property prices are very low, yet incomes of nationals here are the poorest in all of the European Union.
Three target countries where property booms may be over (long before many believe they could have reached the top) include Estonia, Lithuania, and Latvia.
Most experts believe that the combination of a lack of stability in a weakening economy is triggering this effect. Inflation in many of these locations is also a concern. For example, the Bank of Latvia provided reports stating that the country has 14 per cent inflation as of December of 2007. More so, the government here has reigned in the lending practices here, making it harder to obtain credit. They did this in hopes of reducing inflation.
In Estonia, real estate transactions dropped by 24 per cent.
Investors into these countries must consider just how affordable property is in comparison to the economies here.
