1. Ultra-low levels of domestic mortgage penetration
2. Huge growth rates of mortgage sales

Put another way, this means that very few people in most of these countries have mortgages and yet the number of people acquiring them is growing exponentially. This demonstrates a huge appetite for home ownership that will increasingly fuel the upward trend in residential property prices.

These twin phenomena are true, to greater or lesser extents, in most of the Eastern Eight.

But let's focus on Latvia - one of the three Baltic states of Latvia, Lithuania and Estonia, which are often lumped together as they are so small and their existence so inter-woven, culturally and economically.

The fact is there is a quiet revolution taking place in the banking and credit sectors of this country, and it's being fuelled by foreign cash deposits.

Non-residents made up an extraordinary 52% of all depositors in Latvian commercial banks in the first six months of 2003.

This compares to 4.8% in Lithuania and 11.4% in Estonia. And this money is being used to fuel the domestic debt market, particularly mortgages.

According to assessments made by Latvia's Latvijas Unibanka, total assets in all banks in the three Baltic states grew by 7.1% in the first seven months of the year. In real figures, this is growth of €1.26 billion to €18.99 billion.

In the first six months of 2003, the number of mortgages approved by Latvian banks for the purchase of apartments went up by 42.8% to €522million, according to the Association of Latvian Commercial Banks.

Around 55% of these credits were issued by just three institutions - Hansabanka, (23.4%), Latvijas Unibanka (18.8%), and Hipoteku banka (13%).

This is massive rise and yet a relatively small amount of money issued by a small number of banks.

This tells us three things:

1. There is big and growing domestic demand to own property in Latvia
2. The amount of credit advanced for mortgages is still small
3. There is plenty of room for more competition from banks for the growing business, so bringing more borrowers (and more money) into the market

Not only is the amount of credit advanced very small, the number of people doing the borrowing is still, as yet, tiny.

Although the rate of mortgage penetration is growing at an amazing rate in Latvia, it started from an ultra-low base.

There is therefore little to zero chance of rapidly growing domestic demand causing the residential property market to overheat in the near future.

This is vitally important because it suggests there is plenty of growth still to come in the market and that, long term, it will not only be fuelled by foreign money, but by domestic buyers.

Hence, a sustainable real estate market is establishing itself as a key component of the country's economy.

Naturally enough the banks are fuelling the growing popularity of mortgages and the idea of property ownership. And, of course, Latvians are keenly aware of the kind of returns it is now possible to make in the property market.

But consider how few people actually have mortgages at present: in Latvia it is around 7 or 8%; in Estonia, 12%.

Corresponding average figures for Europe are around 30-40%, even 50%.

In short, the potential in these markets is huge.