Building of wooden private houses in Latvia turns u pat the moment. At present in a building field there has been a raising for 32% in comparison to the last year. Among the livers more and more demanding is desire to have an individual space, promoting moving to private houses, further from narrow flats in apartment buildings. “I know, someday I will have a garden…” as it sound in one of the popular songs of Latvians, which proves people mentally desire for their own living space with an ability to “go to the field” meaning something more than a balcony or loggia territory. And what can this dream come true, if not a private house with a garden, bathhouse field in the house or summer house near the lake, making an ability and the freedom of action is much greater.
With a growing building interest in Latvia, increases both demands for the construction workforce and economics all in all. In May of 2018 presented the new world and Baltic economics review by “SEB” bank “Nordic Outlook” shows, that despite that all in all the biggest growth at present is an industrial building, in a sector of living buildings the biggest demand is on economical private house building projects. Also in a company “North House” the most of orders are for wooden carcass house projects.
In a review a significant problem is in case of possible both lack of workforce and studies in case of the experience in a country not only in a sector of the building, so in the building field shall be a situation, that projects will be financially provided, but can be lack of masters, which will build this project. Able to work age people amount is decreasing, so in the individual fields, the shortage of workforce has already been highlighted. At the same time, wage growth and inadequate investment in productive sectors, which are inadequate for productivity growth, can potentially reduce economic growth in the coming years. It is admitted, that urgent reforms are in need, which will fasten productivity, and can ease the current rising cost pressures. But it is clear, that 13th parliamentary elections this fall will significantly delay the process.
A significant impression has made on the export by the third biggest bank in Latvia “ABLV” liquidation process, delaying all the operations thus involving 11 other banks and their foreign operations. Consequently, the drop in exports of financial services reduces GDP by 0.5%.
In comparison to Baltic states, Latvian building growth is the fastest; as the most active building region is Riga and Pieriga (according to issued building permit). Emphasis is placed on that the real income of new households will continue to grow in the near future, ensuring GDP growth (gross domestic product).
“Nordic Outlook” review in numbers:
- the unemployment rate in 2018 is falling by 2%, in 2019 – to a level of 6.8%
- The growth of wages in 2017 is on average 7.9%
- inflation is projected to be 2.7% in 2018, falling by 2.5% in 2019 (inflation may also increase as wages rise)
- the budget deficit could reach 1.2% in 2018, falling to 1.1% of GDP in 2019.
- the total debt is 40 percent of GDP in 2017 and a small budget deficit of 0.5 percent of GDP indicates a country’s financial stability
The rise of the building field is linked with ES fund investment inflow and with an increase in private investment in the construction of trade, office, and residential buildings. Despite that experts think, that temp of the building increase is not long lasting, it doesn’t mean that the amount of the building will be not long lasting. Decreasing the flow of the money from the ES fund financing, the flow from the other resources will increase. The projection of a strong housing boom is due to the high potential demand for high-quality housing and the very low level of household indebtedness.
The positive moment is that the building field prosperity promotes problem-solving in the other sectors. During the year building amount increased to 32% in comparison to the previous year. Those builders who have betrayed the prices of buildings at the prices of the previous year and may be caused by financial problems. Last months also increased the trading activity, which is especially seen in a retail trade. It is more affected by regional centers, but a good increase in consumption will thus be seen in entertainment, catering and leisure services. The most problematic sphere at the moment is the financial field. But, as it was historically, economic overheating in one sector can have enormous consequences; therefore, it is imperative to think about sustainability and the necessary solutions.
Building field increase:
- construction of buildings – 47.7%
- civil engineering – 27.8%
- specialized construction works – 21.5%
Second quartal of this year has been issued 924 building permits for building constructions start, for major repairs, reconstruction and restoration for a total area of 231.8 ths. square meter, including new construction – 708 building permits with an expected area of 166.3 thousand. square meter. 577 building permits were issued for the commencement of the construction of new apartments for one apartment, with an expected area of 117.3 thousand square meters.