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Tallinn offers most affordable housing in Baltic region

SEB’s latest Baltic Housing Affordability Index shows that the average Estonian can buy 49 square meters of housing in the capital Tallinn, whereas the corresponding figure for Latvia and Lithuania are 43 and 35 square meters respectively.

The study also shows that the average Estonian needs to save only 26 months before he or she can make the necessary initial down payment for a standard non-renovated apartment in Tallinn. Latvians and Lithuanians have to save 33 and 45 months respectively.

In coming up with the figures SEB has assumed people can save 30 per cent of their monthly income and that the initial down payment corresponds to 20 per cent of the price for a standard apartment. The mortgage has a 25 year repayment schedule.

“The main reason for the better affordability in Estonia is a higher level of salaries. Housing in Lithuania is more expensive than in Latvia, driving down affordability there despite incomes being similar in the two countries,” Edmunds Rudzītis, household economist at SEB in Latvia, says.

Measured on new apartments only, the study shows a person with an average salary can afford to buy 21.8 square meters of living space in Latvia’s capital Riga compared to 23.7 square meters in Lithuania’s capital Vilnius and 31.1 square meters in Tallinn.

In calculating the headline index figures, SEB takes into account real estate prices, income, interest rates, and consumer prices in the three countries.