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As income increase, housing becomes more accessible in all Baltic capitals

Фото: pixabay.com
Housing Accessibility Index improved in all Baltic capitals in Q3 2018. The main factor for this was the growth of average net salaries. Additionally, beneficial economic development also improved households’ interest for housing acquisition, which was reflected both in increased activity on the apartment market and household loan portfolio growth.

In Q3, Housing Accessibility Index in Riga was 186. This value means the income of households whose income fits 1.5 average net monthly wages in Riga (EUR 1,238) and which want to purchase an apartment with a total area of 55 m2 was 86% larger than necessary to be able to divert 30% of income on mortgage loan maintenance. Over the course of the year, the index improved by 8.7 points. The index improved largely thanks to growth of average net wages (8.4%). Average wage growth also balanced out average apartment price growth. Mortgage loan interest rates decreased slightly, thereby improving accessibility. Thanks to growth of average wages, the time needed for households to save up enough money to afford the first instalment has decreased, Swedbank reports.

«Latvia’s economy grew as rapidly in the first three quarters of 2018 as it did last year. This is also reflected in reduced unemployment and average net wage growth. Slightly increased activity in Riga and the increase for household loan portfolio in recent months are indicative of improved desire among resident to acquire housing. Mortgage loan portfolio has started growing again after almost ten years of decline. It is expected that with economic and residents’ income growth, we will continue to observe moderate development on Riga’s housing market,» comments Swedbank economist Linda Vildava.

Housing accessibility index in Tallinn was 154.3 in Q3 2018, which is 5.8 points above last year’s value. The index improved with average wage growth compensating apartment price and mortgage loan rate increase. The index also improved in Vilnius – by 9.5 points, reaching 134.3. Improvements were caused by rapid average wage increase and slight reduction of apartment prices due to rising competition.


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