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Sunday 28.05.2017 | Name days: Vilhelms, Vilis

Housing availability in Riga – the highest among Baltic capitals

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUHousing availability has grown in Riga in both quarterly and annual perspective. Riga has also taken the lead among Baltic capitals in terms of housing availability. This rise in availability was due to larger wages and lower housing loan interest rates. There was also a slight price reduction in comparison with last year’s third quarter.

Housing availability has also increased in Vilnius and Tallinn. Similar to Riga, the other two Baltic capitals have also experienced slight interest rate declines. Availability in Tallinn and Vilnius was not as quick as that if Riga largely because of a moderate apartment price rise, as reported by Swedbank.

Compared with the same period of 2014, housing availability index has grown considerably in Riga (from 143 to 160) in Q3. Index value 160 means income of a standard household was 60% higher than necessary for the family to divert 30% of income for mortgage loan services. Index growth was contributed to by rapid growth of net wages (8.0%) and the drop of housing loan interest rate by 0.13 percentage points. Housing prices declined on average by 2.1% in comparison with Q3 2014.

According to Swedbank economist Andrejs Semjonovs, average residents’ activity on the housing market continues recovering after the weak first quarter. The number of transactions of residents had grown considerably in Q3. It had even exceeded the average level of last year. The general mood has improved. This is likely because of the support provided by the state support programme for families with children. Housing prices in apartment blocks in housing estates, which forms the bulk of apartment offers in Riga, continued growing at the same rate in Q3 – by 5%. Prices of new projects were on average lower than one year ago. This can be explained with the entry of cheaper projects on the market and the excessively high prices in last year’s July-August period (at least partially due to amendment to the Immigration Law) and low demand from non-residents.

Tallinn’s housing availability index has grown from 142 one year ago to 147 this year. Availability was improved thanks to lower interest rates and 7.9% wage rise. Last year’s rapid apartment price rise has since slowed down to 5.8%.

Vilnius’ housing availability index has grown a bit more than that of Tallinn. However, it remains the lowest among Baltic capitals – 131.

In Q3 2015, the amount of time households in Riga needed to gather enough funds to afford the first instalment for housing loans declined to 25 months (29.7 months in Tallinn and 36.4 months in Vilnius). In Riga, households have to be able to afford to allocate an average of EUR 193 per month to manage mortgage loans (EUR 293 in Tallinn and EUR 219 in Vilnius).

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