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.