Analytics, Baltic, Banks, Markets and Companies, Real Estate

In Riga, housing become more affordable thanks to net wage growth and a reduction in interest rates. In Tallinn, housing affordability slightly decreased on higher loan interest rates, and in Vilnius, housing affordability dropped for the second consecutive quarter amid steeply climbing apartment prices.

In annual terms, the HAI in Riga grew in the third quarter of 2016, rising 2.3 points from the third quarter of last year to 162.5 points, Swedbank informed.

The HAI value of 162.5 for Riga means that household income in the third quarter of 2016 was by 62.5% higher than needed for a housing loan that costs no more than 30% of the family's net income, the bank explained.

The improvement was achieved thanks to a reduction of loan interest rates by 15 base points, as well as a 1.7% increase in the average net wage, although the pace of wage growth has been slowing down for the second quarter in a row. The average price in property transactions climbed 2.2% per square meter as prices went up in all apartment segments.

The HAI in Tallinn declined 0.8% to 145.9 points as interest rates on housing loans increased by four base points, while the average apartment price, just like the average net wage, rose by 7.8% y-o-y.

In Vilnius, the HAI shed 6.4% to 124.3 points in the third quarter of 2016. The reduction occurred as the average apartment price per square meter jumped 12.8% and wages climbed 7.8%, while interest rates rose by four base points.

The time needed to save up for a down payment decreased by 0.1 months to 25 months in Riga, remained unchanged at 29.7 months in Tallinn and but rose by 1.7 months to 38.1 months in Vilnius.