Swedbank has published Baltic Housing Affordability Index. In Q3 2013 for residents of Riga it amounted to 158.4, while for residents of Tallinn - 153.9, and Vilnius - 130.6, according to ee24.com citing Swedbank.
The index is calculated for a family with an income of 1.5 times more than average wage, who wants to buy an apartment of 55 sq.m. It is assumed that the family gets a mortgage in the amount of 85% of the cost of this apartment for a term of 30 years.
If the family uses 30% of its income to repay mortgage, the index is 100. It is believed that if the rating is equal or greater than 100, housing is affordable. The less the family spends to repay the loan, the higher the index. Index would be higher when apartments are cheap, wages are high and mortgage rates are low.
According to Swedbank, in Q3 2013 the average price of apartments in Tallinn was €1,272 per sq.m, in Vilnius - €1,071 per sq.m, in Riga - €801 per sq.m. These figures differ in the smaller side of the data presented in the October Ober-Haus Baltic Apartment Price Index.
Portal ee24.com expert opinion
Karlen Kalashyan, general director of the Latvian real estate agency Property Selection: "The real estate market in the Baltic States is currently in a stable growth. And this growth is confirmed by the level of income and housing affordability. Everyone is looking forward to the two important events, that would impact the Latvian market in 2014: the introduction of euro and the new lending rates, which are expected to grow twice from 1.5-1.6% to at least 3.2%."