1. ANALYSIS OF THE HOUSING AFFORDABILITY AND ITS COMPARISON BETWEEN CZECH REPUBLIC AND LITHUANIA
Ing. David Slavata, Ph.D.
Department of Public Economy
Faculty of Economics, VŠB – TU Ostrava
LITHUANIA, ERASMUS 2018
Alytus –

2. The Aim of the Lesson
To analyze housing affordability in selected European countries and to compare it with the situation in Czech Republic and in Lithuania.
To compare and analyze historical real estate market data of Czech (Czechoslovakia)
To indicate present overvaluation or undervaluation of flats in Lithuania and in Czech Republic.

3. The questions
In which of our countries there is higher probability of housing affordability?
If you would have EUR, in what country you would prefare to invest to reach higher profit?
In what of our countries there is higher risk of housing price decrease?

4. The House Price Index by Eurostat (2015 Q1 = 100)

5. The Indicators PI ratio = P / I PGDP ratio = P / GDP PW ratio = P / W
MI ratio = M / I
PR ratio = P / R
OUn = (P/In + P/Rn) – sum ((P/I + P/R)/N) / sum ((P/I + P/R)/N)

6. We need to indicate:
Flat prices
Monthly payed rents
Salaries

7. The Data Sources
Eurostat

8. Flat Prices in EUR Country City center price m2
Outside of center price m2
City centre rent one bedroom month
Outside of city rent month
Lithuania
1981,24
1237,96
408,00
254,87
Latvia
1568,24
963,57
346,67
248,12
Estonia
2221,56
1480,92
451,91
315,48
Czech Republic
3233,83
2245,01
512,25
392,25

9. Salaries and rate of interest
Country
net slary EUR
Int. rate %
Lithuania
699,05
2,10
Latvia
674,75
2,65
Estonia
1002,64
2,63
Czech Republic
890,9
2,37

10. Rental Yields in % Rental yields City centrum Outside of city centrum
Lithuania
4,24
4,29
Latvia
4,68
5,33
Estonia
4,3
4,43
Czech Republic
3,34
3,63

11. Country
P/I
P/GDP centre
P/W centre
M/I
P/R centre
value
rank
Czech Republic
14,14 3
6,68 11
27,47
87,33 5
28,3 7
Latvia
9,9 14
4,48 24
16,22 17
63,8 16
21,69 19
Lithuania
11,92
4,91 20
22,09
72,82 8
23,33 15
Estonia
9,17
5,27
16,95
58,62 22
22,84

12. P/I P/GDP centrum P/W centrum
Country
P/I
P/GDP centrum
P/W centrum
M/I
P/R centrum
value
rank
Ukraine
15,2 1
8,0 3
29,1 2
319,6
15,4 30
Albania
14,5
7,2 5
29,5
124,6
23,7 13
Czech Republic
14,1
6,6 11
27,4
87,3
28,3 7
Belgium
7,0 28
4,8 22
11,3
43,5
19,5 23
Denmark 29 10
9,9 43
22,8 16
Cyprus
6,3
3,4
7,4
46,4 27
16,9

13. Average Country Overv., under. in % city centre areas
Overv., under. in % outside of centre
Average
value
rank
Czech Republic
31,75
32,55
32,15 2
Lithuania
7,6
10,73
9,16 9
Estonia
-2,6
0,84
-0,88 15
Latvia
-6,87
-10,44
-8,65 20

14. Country
Over/under val. % centrum
Over/under val. % outs. centrum
Average value
Rank
France
39,99
33,01
36,50
1,00
Czech Republic
31,75
32,55
32,15
2,00
Sweden
29,71
24,37
27,04
3,00
Croatia
18,32
25,42
21,87
4,00
Netherlands
-16,77
-17,18
-16,97
27,00
Malta
-16,87
-18,91
-17,89
28,00
Ireland
-29,34
-31,82
-30,58
29,00
Cyprus
-35,57
-30,30
-32,94
30,00

15. Historical Annual Wages 1861 - 1943

16. Average Price Per One Flat Family House

17. Annual Rents

19. Comparison to the level of present prices of European countries:
+32,15%
Comparison to the level of historical Czech (Czechoslovak, Habsburk Empire) prices:
+36,11 %

20. Reasons of overvaluation in Czech Republic
Mortgage interests
Increase of wages
Demographical aspects
Impact of monetary policy

21. Reasons for overvaluation of flats in Lithuania
Restrictions for buing of real estates (?)
Mortgage interest
Transfer of finances from abroad

22. The answers
In which of our countries there is higher probability of housing affordability?
If you would have EUR, in what country you would prefare to invest to reach higher profit?
In what of our countries there is higher risk of housing price decrease?

23. Thank You for Your Attention