COPENHAGEN - Property prices in the Baltic have peaked, according to a new analysis.
Danske Banke Senior Analyst Lars Christensen predicts that prices are ripe for a fall in his flash analysis report, published Aug 8, saying "there are now fairly clear signs that the property market boom has come to an end and that property prices are now ready to fall in all three Baltic States."
Even more significantly, Christensen suspects that the property market could experience a 'hard' landing rather than the 'soft' landing predicted elsewhere.
"It is very difficult to assess how far property prices in the Baltics could potentially fall, but given the large imbalances in the Baltic economies we think the downturn could be quite severe and long-lasting," Christensen says.
The analyst sees price drops being led by the Estonian market, where they are already "clearly visible", with Latvia following and Lithuania lagging slightly. But the general trend is downwards, with a likelihood that the drop could be vertiginous.
Though Christensen is at pains to point out the unreliable nature of available statistics, he draws attention to other items that could exacerbate the situation: "Anecdotal evidence clearly indicates that a lot of the property investments in the Baltics have been highly speculative, which is of course a worry."
He concludes by re-stating that "a slowdown is now underway in the Baltic property and construction markets. This will un-doubtedly contribute to slowing down economic growth . potentially a lot . in all three Baltic countries."