RIGA, Mar 16 (LETA) - Last year, housing affordability improved in Riga and most regional cities of Latvia as both wages and apartment prices continued to climb, Liga Zorgenfreija, chief economist at Swedbank Latvia, said during the presentation of the bank's latest Baltic Housing Affordability Index. 

The Swedbank economist said that when the Covid-19 pandemic broke out, many expected property prices to drop steeply, but the reality proved different - housing prices rose in Riga and nearly all regional cities of Latvia. 

Last year, housing prices in Riga climbed 3.3 percent, with apartment prices rising 4.4 percent in new residential projects and dropping 1.9 percent in Soviet-era apartment houses. As for the regional cities, housing prices rose by 10.8 percent in Valmiera, 4.3 percent in Jelgava, 2.8 percent in Daugavpils and 0.5 percent in Liepaja. Only in Cesis, housing prices fell 5.2 percent last year. 

At the same time, the average wage in Latvia continued to grow last year, making housing more affordable. The Latvian market continued to experience a higher wage increase than the average apartment price growth, Swedbank said.

Zorgenfreija said that last year, housing affordability improved in Riga, Daugavpils, Liepaja and Cesis. Housing affordability remained unchanged in Jelgava but decreased in Valmiera where housing prices rose fast in 2020. 

According to Swedbank's data, 58 percent of residential property transactions last year involved Soviet-era standard design apartments, 22 percent of transactions involved apartments in new projects, 10 percent were transactions in apartments in the city center and 10 percent in new apartments in the city center. 

Apartment prices averaged at EUR 50,000 in Riga, EUR 39,000 in Valmiera, EUR 35,000 in Jelgava, EUR 30,000 in Cesis, EUR 27,000 in Liepaja and EUR 20,000 in Daugavpils. 

According to Swedbank's estimates, an average family needed 17 months to save up for the down-payment when buying an apartment in Riga. Saving for the down-payment took 16 months in Valmiera, 15 months in Jelgava, 13 months in Cesis, 11 months in Liepaja and 10 months in Daugavpils.

The housing affordability index (HAI) 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. The HAI is 100 when households use 30 percent of their net wages for mortgage costs. When the HAI is at least 100, households can afford their housing, according to the established norm. The higher the number, the greater the affordability.