“Housing affordability index dropped by 1.7 points, to 101.7 points, in the fourth quarter of 2011 from the previous quarter due to fast growth in apartment prices. Wages in Vilnius exceeded the amount sufficient to be able to acquire a standard apartment by meager 1.7 percent,” Vaiva Šečkutė, Swedbank’s senior economist, said in a press release.
The respective index in Riga rose by 4.1 points over the quarter, to 145.6 points, and in Tallinn – by 10.1 points, to 154.3 points. It means that the households’ income from wages in Riga was 45.6 percent and in Tallinn 54.3 percent higher than needed to afford an apartment.
The HAI in Tallinn rose as a result of lower interest and fast growth in wages. Moreover, the prices of apartments in Estonia’s capital remained almost unchanged in the reporting period. In Riga, the affordability of housing improved due to a decline in the prices of apartments and a slight increase in wages.
Swedbank’s housing affordability index for the Baltic countries is calculated for a family whose income is equal to 1.5 percent of average net wages with an average-sized apartment of 55 square meters acquired with a 30-year mortgage loan covering 85 percent of housing value.
