Apartment Deals, Prices In Estonia Picking Up But Caution Still Needed

Summer 2011 apparently experienced a low volume of real estate transactions in Estonia, according to Tõnu Toompark on his adaur blog. However, the months of August and September actually saw a rise to the highest level of the year so far, writes Tõnu. There were 3 428 apartment transactions in the third quarter of 2011.

The increased level of transactions also left its mark on average transaction price and values, which are both rising rapidly, Tõnu continues.

Whereas the number of transactions rose by 5.3 per cent and average prices by 14.1 per cent, the overall value of transactions has risen by 25 per cent.

That being said, given that the global economy has not yet found a solution to its continuing risks, the resulting uncertainty means that it unwise to forget about the potential risks involved.

One upside of the current situation, Tõnu writes, is that caution is held in much higher esteem than would have been the case in the past, despite the steady improvements in the market; noone is suggesting that real estate is a risk-free investment which cannot experience a subsequent fall in prices over time, something that was apparently lost on the market during the boom years of 2005-2007.

As a comparison, the number of deals peaked twice during the boom years, at around 8 500 in the fourth quarter of 2005 and again at slightly less than that a year later, when overall value of transactions stood at its highest level of  a little over 500 million Euros; the low point (first quarter of 2009) saw around 2 000 deals and a total value of less than 100 million Euros.

Average prices peaked at in the second quarter of 2007 at around 1 200 Euros per square metre, reaching a low of approximately half that (600 Euros per square metre) in the third quarter of 2009. The average price per square metre currently stands at around 700 Euros per square metre.

The full article (in Estonian) along with detailed graphs depicting overall value of apartment deals, number of transactions and average price per square metre going back to 2004 can be found here.

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