Housing affordability index improved in Riga and Vilnius, but decreased in Tallinn in the fourth quarter of 2017
The housing affordability index (HAI) increased to 186.3 in Riga, and 129.9 in Vilnius, but decreased to 151.5 in Tallinn.
• In Tallinn, affordability decreased slightly by 0.3 point in the fourth quarter of 2017, compared with the same period in 2016, as rapid wage growth did not outweigh robust apartment price growth and an increase in interest rates.
• In Riga, the HAI rose marginally by 0.7 point as wage growth and a continuous decrease in interest rates counterbalanced apartment price growth.
• In Vilnius, the HAI improved by 1.1 points as swift wage growth offset apartment price growth and an increase in interest rates.
• The time needed to save for a down payment decreased by around a month in Vilnius and by a couple of days in Tallinn, to 35.7 and 29.0 weeks, respectively, while increasing in Riga by around a week, to 23.1 weeks.
The housing affordability index (HAI) is calculated for a family whose income is equal to 1.5 of average net wages with an average-sized apartment of 55 square meters. The HAI is 100 when households use 30% of their net wages for mortgage costs. When the HAI is at least 100, households can afford their housing, according to the established norm. The higher the number, the greater the affordability.
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