During the second quarter of 2020, the Baltic economies, like the rest of the world, were hit by the corona crisis. In the housing markets of the Baltic capitals, it was the secondary market that bore the brunt of pandemic damage.
There was a drop in the number of transactions in the secondary market, resulting in new apartments gaining a bigger market share. In Tallinn and Vilnius, this change was significant enough to skew average prices upwards and make housing less affordable. Thus, in the second quarter of 2020, the housing affordability index tells the story of a crisis-induced change in market structure due to a large but temporal drop in the number of transactions, rather than of a permanent shift in housing affordability.