Energy Savings Pay Off When Buying Real Estate In Estonia

When buying a new home, it seems that the biggest cost is likely to be the actual purchase price according to property developer Allan Kool, in an article published on Tõnu Toompark’s adaur blog. However, it gradually dawns on home owners that there are other costs associated with home buying which are essential; the most significant of these is energy costs, he goes on.

This article will attempt to make a comparison of apartments with different energy-classes. The two apartments in question are a 2006-built gas central-heated D class terraced apartment with a 2011-built A class apartment, which is being developed by Mr. Kool. In addition a typical family dwelling built in the 1960s, using coal as a heating medium will also be compared (the EU energy performace rating scale runs A-G, where A is the most efficient level and G the least efficient).

With a total area of 133 square metres, the 2006 built energy efficiency D-rated apartment experienced a total heating bill for 2010 of 2 150 Euros, or 180 Euros per month.

The 1960s-built house was classified with an energy efficiency F rating, and at 144 square metres in area cost 2 365 Euros per year, or 200 Euros per month.

By contrast the 2011-built apartment, located at Vuti Street 36/38 in the Kristiine region of Tallinn, the smallest of the three in the comparison at 125 square metres and with an energy rating level A (i.e. the most efficient) had a far lower figure for its estimated heating costs for 2011, at just 800 Euros (i.e. a little under 67 Euros per month).

Thus it can be said that the more efficiently-rated flats actually have heating costs that are over three times cheaper than a less well-rated apartment!

In general, Mr. Kool argues, energy price forecasts are somewhat tentative. He cites the claims of noted Estonian geologist Anto Raukas that energy prices in the future might be as much as three times as high as today. As a result, attempting to protect the return on investment becomes paramount in this situation.

Nonetheless at current price levels the A-rated terraced dwelling maintains a saving of 27 000 Euros over 10 years on that basis when compared with the D-rated property. When compared with the F-rated older family home that figure is even higher, at a 32 000 Euro saving over 10 years.

In summing up, it could be said that energy is a significant issue that directly affects an individual’s income. Costs, especially heating costs, should be thought about very hard when making a purchase in the housing market. A property with a lower purchase price can prove much more expensive in the long term in comparison with that with a more efficient level of energy consumption, thus it is worth paying close attention to the energy rating when buying your home.

The full article (in Estonian) including a table comparing the three properties studied is available here.

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Statistics: Growth In Volume Of Land Transactions In Estonia

Both built up and raw land in Estonia has seen a significant increase in the number of deals in the second quarter of 2011, according to Tõnu Toompark on his adaur blog. This is in direct contrast to apartment deals which over the same period have seen a decline in frequency.

The second quarter of 2011 saw 2710 transactions involving undeveloped land, which is almost one fifth higher than a year ago, writes Tõnu. This at the same time represented an increase in value of sales of 62 per cent. Total growth in sales of undeveloped land over the same time period came to a value of 66 million euros, Tõnu goes on.

The majority (80 per cent) of land deals have involved undeveloped land, but only 66 per cent comprised profit-yielding land, Tõnu explains.

1351 deals involving developed land were concluded in the second quarter of 2011, writes Tõnu. Whilst the number of deals of this type as a whole rose by 10 per cent year-on-year, their corresponding value only rose by 2 per cent over the same period, he says.

According to Tõnu, the total value of sales of built-on land came to 109 million euros.

Developed land transactions made up the majority (60 per cent) of all residential deals, Tõnu continues.

Both developed and undeveloped land transactions are still a long way off the peak levels in 2006, when the total number of undeveloped land transactions stood at over 4000 in the second quarter of the year, to a value of over 300 million Euros, and developed land transactions stood at around 3000 during the same period, naturally with a higher total value (peaking at just under 450 million Euros in the final quarter of 2006).

See here for the full report (in Estonian) plus graphs illustrating the changes in value and total number of developed and undeveloped land transactions since 2004.

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Estonia Property Prices Lowest Since Downturn, Offers Increase

Positive changes in residential offer prices in Estonia as reflected in the kv.ee index are, despite positive forecasts, not apparent, with the index showing its lowest figure since the 2008-2010 crash, standing at 61.0 on 3 July, 2011, writes Tõnu Toompark on his adaur blog.

This, however, does not represent a catastrophic drop; the figure is only 1.5 per cent lower than a year ago.

Over the past year the index has fluctuated, albeit in the narrow range of just two points. Unfortunately the index is thus far a long distance from the 10 per cent rise predicted at the beginning of the year.

That said, there has been a 10 per cent rise in the level the number of offers year-on-year. At that time the number of offers in the kv.ee portal stood at 18 900, whereas at the time of writing the figure is 20 700, Tõnu writes.

The deals cited consist of offers on apartments and residential houses. The latter are primarily to be found in provincial Estonia (The biggest change was in provincial Estonia, in Paide – not that houses predominate there, of 185 per cent).

In Tallinn the number of residential offers has increased by 9 per cent year-on-year; in the second city of Tartu, and the south Estonian town of Võru, the number of offers have actually decreased, by -6 per cent and -7 per cent respectively, according to Tõnu.

The original article (in Estonian) including a table showing changes in number of offers for all regions of Estonia, can be found 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. As noted the lowest figure since the downturn of 2008 onwards, of 61.0, has just been recorded.

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