Apartment price growth and rising interest rates dealt a blow to housing affordability- More homebuyers are priced out of the primary market
Housing affordability fell sharply in the Baltic capitals as climbing interest rates increased the cost of mortgages. On top of that, apartment price growth exceeded wage growth. In the fourth quarter, housing affordability index (HAI) values slipped to 110.5 and 107.0 for Tallinn and Vilnius respectively. Housing was still affordable (HAI above 100), but affordability was the lowest in more than a decade. Riga boasts the most affordable housing among the Baltic capitals, but its HAI also plunged from a record-high 207.2 in late 2021 to 164.3 in the fourth quarter of 2022.
