Latvia property forecast 2027: prices, tax, rent

Prime Minister Kulbergs' United List won decisively, and the next coalition will most likely carry on where this one left off. For the market that means an easier way in for families, a costlier state and fewer foreign tenants. But over the next two years, Frankfurt will move prices more than the Saeima.

House prices in Latvia 2026: the market in numbers

Indicator	Value	Source
House prices, year on year (Q2 2026)	+11.4%	Official Statistics Portal
Existing homes / new builds	+13.3% / +1.7%	Official Statistics Portal
Riga rents, year on year	+5–6%	Latio
ECB deposit rate	2.50%	ECB
Inflation forecast for 2027	3.8%	Latvijas Banka
Mortgages to GDP: Latvia / Estonia	13% / 31%	Latvijas Banka
Population, start of 2026	1.845m (−0.83%)	Official Statistics Portal

The new government and housing policy: stability with three partners

In Saturday's vote, the United List (AS) took 35.3% and 41 of 100 seats. Ainārs Šlesers' Latvia First came second with 17, followed by Sovereign Power with 15. The National Alliance (NA) and the Progressives won 10 each, New Unity (JV) 7. The Greens and Farmers fell below the 5% threshold.

Andris Kulbergs has led the government since May and is opening talks with his current partners, JV and NA. He has ruled out governing with Latvia First. AS + NA + JV adds up to 58 seats.

For investors that is good news: no sharp turns. The best guide to the next four years is the current government's May declaration.

The market went into the election hot and uneven

Official statistics show home prices up 11.4% over the year, with 3.9% in the second quarter alone. But the rise is driven by existing homes. New-build prices gained only 1.7% in a year.

Latio's figures show where the problem lies. Asking prices in new projects average EUR 3,220/m², but actual deals close 16% lower. In June, 3,530 flats were for sale in Riga, more than 64% of them new builds. Developers are sitting on stock they need to move.

Rents are lagging. In Riga they rose 5–6% over the year, while sale prices grew about twice as fast. For landlords that means one thing: yields are shrinking.

ALTUM guarantee with no down payment: who wins?

The government declaration promises a long-term housing programme for families. Step one is to scrap the mandatory down payment and replace it with an ALTUM state guarantee. An ALTUM-run fund financed by second-pillar pension money is also planned.

It sounds like good news for buyers, but the evidence from abroad is mixed. Economists at the London School of Economics studied Britain's Help to Buy scheme. In London, where building is hard, it mostly pushed up prices. In regions with available land, it produced more new homes. Developers were the biggest winners.

Latvia will likely see the same pattern. Supply of flats in central Riga and Soviet-era blocks does not change, so there the guarantee will mostly turn into higher prices. In new projects it will help clear unsold stock. In the regions the effect will be weak: there is simply little to buy.

Property tax 2027 and cadastral values 2029

From 2027, the law requires defence spending of at least 5% of GDP. In July the Finance Ministry warned that without changes the deficit will reach 4.2% of GDP in 2027 and 5.4% in 2028. It says openly that both spending cuts and new revenue will be needed.

Property tax is an obvious candidate. New Unity promises to make it a full municipal tax. The key date is 15 June 2027, by which the government must approve a new base of cadastral values, to apply from 2029.

Today the tax is still calculated from 2012 market data. The new universal values are on average two to three times higher. Theory and practice both show that markets price expected taxes in early. So a decision in 2027 could move prices long before 2029.

For landlords the risk is already here. In Riga, a flat with nobody registered as living there on 1 January pays 1.5% of its cadastral value. If values triple, that rate will start to hurt.

Property tax is not the only tax that affects landlords. We have written separately about how rental income is taxed.

Fewer foreign tenants

A new Immigration Law took effect in September. Buying property no longer earns a residence permit. A few weeks later the government backed a 71-point plan with quotas for third-country nationals and a cap on foreign student numbers. Business groups criticised the lack of an economic impact assessment.

The National Alliance will stay in the coalition, so this course will hold. Meanwhile the population keeps shrinking, by 0.83% last year. The hardest hit will be small flats and rooms in central Riga rented by students and workers from outside the EU. The family housing market will barely notice.

Frankfurt matters more than Jēkaba Street

The Saeima does not set EURIBOR. The ECB has raised rates twice this year, and the deposit rate has been 2.50% since September. Latvijas Banka expects 3.8% inflation in 2027. If that happens, mortgage payments will rise and eat into the benefit of scrapping the down payment.

Riga rental market trends: scarce supply, slow fix

According to the OECD, rentals make up only 12% of Latvia's housing stock. Almost half of households are a “missing middle”: too well-off for benefits, not well-off enough for a mortgage. ALTUM's low-rent programme currently funds about 1,140 flats with rents capped at EUR 6.71/m². That is small, but it already sets a ceiling for regional rents.

Why the autumn will be quiet

Political scientists Brandice Canes-Wrone and Jee-Kwang Park found a pattern across OECD countries. Before elections, households and firms postpone large purchases that are hard to reverse, including homes. The wider the gap between party programmes, the stronger the effect.

This time the winner is clear, but coalition talks can run until 3 November. Then comes the 2027 budget with its tax decisions. So the fourth quarter will be calm, and activity will return once the tax picture is clear.

Three scenarios for 2027–2028

Scenario	Coalition	House prices	Rents	Main risk
Base (most likely)	AS + NA + JV	Growth slows to single digits; existing homes outpace new builds	Rise in line with inflation; small central flats under pressure	Tax increases
Broader coalition	AS + JV + Progressives	Similar; more rental housing and a more progressive property tax	More public rental stock	Political instability
Stress	any	Stagnation or correction	Falling demand from foreigners	ECB rates above 3%, energy shock

What to do now

Buyers with children: wait for the guarantee terms, but expect prices to climb where supply is tight.
Owners and landlords: watch the 2027 property tax reform and check how much your portfolio relies on foreign tenants. Long-term lets to locals will be more stable.
Developers: the guarantee can help clear stock, and pension money could fund rental projects.
Tenants: rents will likely rise more slowly than sale prices, since new-build supply is large.

For owners who want to avoid these risks, long-term letting with guaranteed payment is a good fit. Buyers will find our guide on how to choose a flat to rent out useful.

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Sources

Analysis prepared on 5 October 2026, before the coalition agreement and the 2027 budget. Forecasts are the author's assessment, not financial advice.

Latvia property market forecast 2027: what the new government will change