At the start of 2020, the housing market in the Baltics was still unfazed by the pandemic. Overall housing affordability was high in all the capitals.
However, housing affordability in Tallinn and Vilnius decreased in the first quarter, compared with the same period of 2019, as apartment price growth outpaced wage growth. In Riga, the housing affordability index (HAI) value increased as wages grew more rapidly than apartment prices.
The COVID-19-induced economic shock will affect the housing market negatively, but sustainable growth during the past decade, low leverage and ample money supply mean that the price drop is likely to be modest and short-lived.
