Analytics, Baltic, Financial Services, Loan, Real Estate

In Riga, the HAI increased by 4.7 points compared to the fourth quarter of 2014, reaching 160.1 points. The HAI in Tallinn grew 4.2 points to 153.4, and the HAI in Vilnius rose four points to 129.2.

The HAI value of 160.1 for Riga means that household income in the fourth quarter of 2015 was by 60% higher than needed for a housing loan that costs no more than 30% of the family's net income.

Housing affordability in Riga improved due to a 7.7% rise in wages while the average apartment price increased 2.8% year-on-year. The situation in Tallinn was similar with wages rising faster than housing prices - 6.6% against 4%. In Vilnius, wages rose 4.3% year-on-year but apartment prices increased only slightly – by 1.3%.

In the fourth quarter of 2015, mortgage interest rates decreased year-on-year in Lithuania and Estonia but rose in Latvia.

The time needed to save for a 15% down payment decreased by one month and one week in Riga to 24.6 months, by three weeks in Tallinn to 28.5 months, and by one month in Vilnius to 36.8 months.

Swedbank publishes its Baltic Housing Availability Index quarterly. The HAI reflects household buying power, based on apartment purchases that have been made, but says nothing about opportunities for apartment sales. It includes mortgage costs but excludes taxes and subsidies, including property tax and interest deductions, as well as housing maintenance costs such as utility bills.

The 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 index, the greater the affordability.