Housing affordability index improved in Tallinn and Riga but worsened in Vilnius in the first quarter 2018
The housing affordability index (HAI) increased to 182.0 in Riga and 152.0 in Tallinn, but decreased to 133.1 in Vilnius.
• In Tallinn, the HAI rose by 5.9 points in the first quarter of 2018, compared with the same period in 2017, as very rapid wage growth offset apartment price and interest rate increases.
• In Riga, the HAI improved by 15.8 points as brisk wage growth and a decline in interest rates surpassed an increase in apartment prices.
• In Vilnius, the HAI decreased by 1.5 points as fast wage growth could not outweigh apartment price growth and an increase in interest rates.
• The time needed to save for a down payment decreased by a month and three weeks in Tallinn, by around two months in Riga, and by three weeks in Vilnius, to 28.5, 23.6, and 34.4 months, respectively.
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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