Construction challenges in rural areas of Latvia: Costs, financing and housing stock

Not only does construction activity in the regions play a crucial role in the regional development, as it not only provides employment opportunities and thus contributes to the well-being of the population, but also creates favourable conditions for access to modern housing and requires the mobility of human resources to the regions. At the same time, construction in regions and rural areas often implies more difficult conditions than in urban environments, which are associated with both funding opportunities and working conditions. The availability of financial investments to the private sector is limited for the construction of housing outside Riga and Pierīga region, which significantly reduces construction opportunities in the regions of Latvia. The study evaluates the possibilities of obtaining new housing in the regions of Latvia, analyses the trends in construction volume and costs from 2015, modelling forecasts until 2026. The study looks at various economic instruments that could contribute to the development of construction and new housing in the regions. The study uses surveys of municipalities, entrepreneurs and experts in the field of construction, in-depth interviews, focus groups and statistical data processing methods. It has been concluded that Latvian entrepreneurs tend to postpone investments or invest only in the economically strongest moments, which further aggravates the gap between urban and rural areas. The trends identified in the study indicate a possible further direction of stagnation or recession in the construction sector of new housing in the regions of Latvia, which will directly affect regional development in the next five years. The study highlights the necessary interventions for more productive regional housing stock cohesion.