Estonian Housing Offer Prices Holding Back Market Index

As recently posted on this blog, a sluggish real estate market in provincial Estonia is having a deleterious effect on the Estonian housing market as a whole, as reflected in the kv.ee index. According to Tõnu Toompark’s Adaur blog, neither the ensuing heat that summer has brought, nor the following showers, have had an effect on the index, which currently stands at 61.3 (earlier in the month the figure was 61.4).

This is 1.3 per cent lower than this time last year; over the last year the figure has only fluctuated a little, between 61.1 and 62.8 writes Tõnu.

The main factor is that, notwithstanding the much-vaunted talk of a rise in offer prices in the real estate market, these supposed increases have been lost in the stutcture of transactions, Tõnu goes on.

Having said that, it appears that both offer and transaction prices in Tallinn and Tartu, the two largest cities in Estonia, have been rising. However it is clear that the property market in the rest of the country has been struggling and this is preventing any possible index rate rise, Tõnu says.

It is worth specifically mentioning house (as opposed to apartment) prices. These have long stayed at an unrealistic level, Tõnu explains. However they have recently fallen to more realistic levels, which by itself will mean more realistic price levels in rural areas, Tõnu writes.

For a comparison of changes in prices over a one day period (10-11 May) when prices in the whole of Estonia fell, sometimes by quite some margin, plus a diagram showing the kv.ee index for the past year, see the original article (in Estonian) here.

The KV.ee index, which commenced on 18 February, 2008 (i.e. this is the date on which the value of the index is calibrated at 100) measures the week on week change in residential real estate prices in Estonia. The data has been measured back anachronistically to 1 January, 2005, when the index stood at an “all time” low of 49.9. The “all time” high came on 7 May, 2007, when it stood at 108. Following the economic downturn of 2008 onwards, the index reached a low point (to date) of 61.4 on two occasions, on 5 September and 27 October, 2010.

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Index Of Repair And Reconstruction Prices In Estonia Have Risen By 1.7 Per Cent

According to Tõnu Toompark’s Adaur blog, the price index for repair and reconstruction work in Estonia appears to be following that of construction itself, seeing a recent rise.

Whilst the price index for construction work in the first quarter of 2011 saw a rise of 1.5 per cent, repair and reconstruction work has seen an increase of 1.7 per cent over the same period.

In both cases the index rise was the main factor in a subsequent rise in labour costs. This has led to an overall increase in repair and reconstruction work of 5.1 per cent year-on-year.

The full article, together with graphs showing figures for indices along with percentage changes in indices for building materials, capital, labour and the overall index, since 2001, can be viewed here. The all time high in labour cost index figures came in the first quarter of 2008, at a little under 280 (the index is calibrated anachronistically to 100 in 1997). This was followed by a steep drop in the downturn of 2008-2010, and stands at a little over 220 today.

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Real Estate Offers In Estonian Regions Still Falling

Here at Tallinn Property we tend to focus, naturally enough, on Tallinn, but this article will give a snapshot of the residential real estate situation in provincial Estonia.

The current trend in Estonian residential offers as reflected in the real estate portal KV.ee‘s index is to continually move in a horizontal direction. Today’s KV index stands at 61.4, which is 1.9 per cent lower than a year ago, according to Tõnu Toompark on his adaur.ee blog.

The average offer price for the whole of Estonia is being hindered from rising by the fact that residential offer prices in the regional centres are still facing a severe downturn.

Through the year, only four regions have seen a rise in asking prices of apartments, and even then these areas have only experienced the average asking price level for Estonia plus one per cent YoY.

However the situation with regard to transaction prices is not so bleak. Transaction prices are now in the black in what in the UK would be termed county towns.

The decline in offer prices is partly explained by the fact that there has been a steady increase in volume of offers in most of the regional centres, in some places by as much as twenty per cent. In any case an increasing downward pressure on prices is taking place, writes Tõnu.

The number of offers has been rising rapidly since the beginning of 2011, he writes.

The full article (in Estonian) is here, and includes a table showing number of offers and average offer prices for all of the county towns, and the percentage change over the last year, plus the figures for the whole country.

You can find out more about what is happening in the Estonian real estate market here.

The KV.ee index, which commenced on 18 February, 2008 (i.e. this is the date on which the value of the index is calibrated at 100) measures the week on week change in residential real estate prices in Estonia. The data has been measured back anachronistically to 1 January, 2005, when the index stood at an “all time” low of 49.9. The “all time” high came on 7 May, 2007, when it stood at 108. Following the economic downturn of 2008 onwards, the index reached a low point (to date) of 61.4 on two occasions, on 5 September and 27 October, 2010.

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