The HAI in Vilnius decreased to 123.7 points. Here the index shrunk by 5.2 points because of a 15.1% annual increase in apartment prices. Prices of new apartments jumped by as many as 20%, while prices of old construction apartments went up by 8%. In the new apartment market, unlike in the old apartment segment (21.4% down), the number of deals grew rapidly as well: in late 2014, the number of sold apartments was at its highest since 2008, or by 33.3% higher than a year ago.
Also, the time a buyer needs to save for a down payment increased by 3 months and one week in Vilnius in 2014.
Nerijus Maciulis, chief economist of Swedbank Lithuania, says that the activity in the real estate market was accelerated by the euro adoption: both emigrants who are worried about growing prices and residents who have enough cash bought housing.
The economists estimate that apartments in Vilnius will become unaffordable if their prices jump by 23.7% or home loans interest rise to the record-high average of 4.4%. However, such trends are not expected.
"It seems that affordability in the nearest future should not decrease significantly since the growth of housing prices will be slowed down by a large supply, the growth of wages should not slow down, while home loans interest rate is expected to remain rather low," said Vaiva Seckute, a senior economist of Swedbank Lithuania.
Maciulis, meanwhile, added that the bargaining power will be in the hands of buyers rather than sellers.
The housing affordability index is calculated for a family whose income is equal to 1.5 of average net wages with an average-sized apartment of 55 square meters.
