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Friday 26.05.2017 | Name days: Varis, Eduards, Edvards

Housing becomes more accessible to Baltic residents

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUHousing accessibility improved in Q3 2015 in all three Baltic States. In addition to that, with wages growing more rapidly than real estate prices, the time it takes to save up money for the first instalment decreases.

SEB Housing Accessibility Index for apartments increased by 1.4 m2 to 53.4 m2 in Q3 2015. Riga is ahead of capital cities of neighbouring countries in this regard. The index of Vilnius has grown by 0.9 m2 to 42.1 m2 and that of Tallinn – by 0.5 m2 to 42.6 m2.

«Growth of the index in Latvia and Lithuania was positively impacted by the growth of income of working people, which was ahead of price rise in the real estate sector in Q3 2015. The decline of interest rates played a part as well. The average wages of working people in Estonia was lower in Q3 2015 than it was in previous quarters. This was largely because of seasonal factors. There was, however, positive influence on housing availability in the price segment of Tallinn’s sleeping districts following the rapid rise in previous quarters,» – comments SEB Bank social economic experts Edmunds Rudzitis.

There was also a positive impact on the index value in the form of a reduction of housing loan interest rates. Over the course of the year, the average interest rate for housing loans had declined by more than 0.1 percentage points across the Baltic States. The lowest housing loan interest rate was in Lithuania in Q3 2015 (2.01%), followed by Estonia (2.69%) and Latvia (3.37%).

With income growing more quickly than real estate prices, the time it takes to save up enough money for the first instalment decreases. It is estimated that residents would require 25.5 months in order to save up enough money to afford the first instalment for a 40-m2-large apartment for a Riga resident (24.9 months in Tallinn and 28.5 months in Vilnius).

«Although housing accessibility index for apartments in Riga is the highest, buying a home in Tallinn is much faster. In Latvia, the process of gathering money for the first instalment can be made easier by the state support programme for families with children. It is provided by Altum. SEB Bank has already provided nearly 300 housing loans with state guarantees to families this year. Thanks to state guarantees, it is possible to reduce the size of the first instalment by 5-6%,» – said SEB Bank’s expert.

Ref: 102.109.109.6773


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