The KV.ee index for residential prices in Estonia, which has stayed with the range of 61-65 points through the course of this year, yesterday settled at a figure of 61.8, thus falling by 4.3 per cent through the course of the year, according to a report by Tõnu Toompark on adaur.ee (in Estonian).
The average price for the whole of Estonia stands at 12 686 EEK per square metre at the time of writing, down from 13 272 per square metre exactly a year ago.
This is hard to believe, given the fact that the residential property market is becoming increasingly active, Tõnu argues, and could in fact be due to the fact that the index lags behind actual prices by as much as a year. Actual transaction prices are probably stable and not falling at the moment.
Looking at the three major Estonian towns (Tallinn, Tartu and Pärnu) it appears that the gap between asking prices and the corresponding actual transaction prices has narrowed somewhat, to below 4600 EEK and 4200 EEK per square metere in Tallinn and Tartu respectively, and just 2200 EEK per square metre in Pärnu.
However Tõnu predicts that this trend will not continue indefinitely, and it seems likely that transaction prices will start to rise slightly in the near future. He goes on to explain that most of the difference between asking and final transaction prices does not represent a growing market but rather reflects the differing expectations of buyers and sellers. He also speculates that estate agents are wanting to return to pre-crisis price levels and are thus influencing prices upwards to a certain extent – this could mean that the disparity between asking and transaction prices will rise…