Statistics: Housing expenses have increased 8% within a year

According to Statistics Estonia the consumer price index of October is 1,5% higher than that one year ago. At the same time housing expenses have increased as much as 8% in one year.

By today, in comparison with the year 1997, the consumer expenses have almost doubled and the housing expenses have increased 3,2 times. This means that the increase in housing expenses exceeds the overall increase in consumer prices during that time 66%.

According to Statistics Estonia, as of September the construction price index which influences the real estate market mainly from the supply side, is 4,9% higher than that one year ago.

The increase in construction price index is mainly due to labour expenses becoming more expensive. Unfortunately this does not mean increase in salaries in that sector but the positive process of black-market labour legalization.

Consumer price index, construction price index, producer price index of industrial output YoY

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Statistics: There are 159,411 residential mortgage loans in Estonia

The average residential mortgage loan in Estonia fell to €36,802 in Q3 2013. However, the changes are not significant – the loan balance a year ago was just 1% bigger than today.

The average loan amount is decreasing mainly as a result of new residential mortgage loans. The total number of residential mortgage loans just a year ago was 157,600, but the relevant indicator at the end of Q3 2013 was 159,400. This shows an increase of 1.2%.

The main factor behind the increase in the number of residential mortgage loans is the interest rate, which has remained very low for a year now. The increase in average wages has supported the good impact of the low interest rate.

The fear of missing out on the price increase shared by home owners is also something that must be mentioned. The hope that the fast increase in apartment prices seen last year will also continue in the coming years is an increasingly more frequent reason for buying a home.

Balance and number of residential mortgage loans in Estonia under repayment

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Statistics: Residential development loan balance down by 17% in a year

According to the Bank of Estonia, the balance of loans granted for investment properties and development in Q3 2013 was €1.7 billion. This is 4.6% less than in the previous year.

The loan balance of retail property financing has decreased by 21% and the loan balance of residential development by 17%.

The decrease in the residential development loan balance is the result of the low new loan turnover. In Q3 2013 banks issued loans in the amount of €7.5 million for residential development, which is one of the lowest figures in recent years.

Balance of loans granted to non-financial companies by purpose graph

Turnover of loans granted to non-financial companies by purpose graph

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Economic Growth In Estonia Continues, But Slows In Q2 2012

According to a recent report on the Statistics Estonia site, economic growth in Estonia grew by two per cent y-o-y to Q2 2012.

However, GDP only grew by 0.4 per cent, when seasonal and work-day factors are taken into account, between Q1 and Q2.

Most of the growth came from the construction, information and communication and administrative and support service areas, whereas manufacturing, the biggest single sector, had a negligble effect on growth, according to the report.

The report stated that reductions in value added in the real estate sector, going back to Q3 of 2010, had an impact on this slowing. Normalisation after the adoption of the Euro (which saw a rise in real estate prices due to ’rounding up’ around the time of the currency’s adoption in January 2011) and the rise in construction material prices may have been two causes of this.

This is not the final word on the matter from Statistics Estonia however; figures for Q1 and Q2 2012 growth will be re-estimated and published on the site on 7th September, the report stated.

The original report is available here.

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Retail Sales In Estonia Continuing To Grow

More hopeful signs of economic recovery in Estonia comes with a recent report on the Statistics Estonia site which states that retail sales in Estonia increased by seven per cent y-o-y to June 2012.

Furthermore this trend has been continuing since March 2012; every month between March and June saw an increase in retail sales of between six and eight per cent, according to the report.

The total retail sales of goods of retail trade enterprises, to give the retail sector its full name, came to a value of 384.8 million Euros in June 2012, which represented about 80 per cent of the total revenues from sales of retail trade enterprises (484.9 million euros)* the report stated.

There was an apparent growth in all areas, but the sector with the biggest increase was pharmaceuticals and cosmetics (17 per cent) together with ‘non-specialized stores selling predominantly industrial goods’ (16 per cent) and ‘retail sales via mail order or the internet’ (15 per cent).

Retail sales in grocery stores grew six per cent y-o-y which was actually a lower figure than had been the case over the previous two months, but this was largely due to that sector starting from a higher reference base in June 2011 than some other sectors, the report stated.

The overall retail sales in retail trade enterprises month-on-month increase in June 2012 was three per cent at constant prices, and one per cent by seasonally and working-day adjusted data. 

Over the six month period January-June 2012 the report said that retail sales in retail trade enterprises increased by nine per cent at constant prices compared y-o-y.

The original report is available here.

Goodson & Red Tallinn Property Consultancy is a premier real estate service in Estonia, specialising in residential and commercial Tallinn real estate, with a strong focus on consultancy services for overseas property investors in Estonia. Our recent media accolades include mentions in both the UK quality newspaper the Daily Telegraph, and the New York Times.

*Revenues from sales increased by fourteen per cent at current prices y-o-y to June 2012, and by two per cent month-on-month, the report stated.

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Estonia’s Credit Rating Affirmed At A1 By Moody’s

Bond credit raters Moody’s Investor Services have affirmed Estonia’s A1 government bond rating and stable outlook.

As reported on this blog, Fitch had already upped Estonia’s rating to A+, so this is more good news.

The rating was based on factors including the Estonian government’s budgetary rigour and financial strength during the continuing crises of the 2008-10 downturn and the Eurozone (Estonia joined the Euro in January 2011) the low level of public debt, healthy banks and Estonia’s ability to withstand external shocks.

The rating could change over time of course, with both up- and downgrades possible. If Estonia had a long-term track record of steady growth (GDP has of course been growing since the downturn) and a strengthening and diversification of its economic base (recovery has largely been export driven) an upgrade might be on the cards, according to Moody’s.

Conversely, if an intensification of the Eurozone crisis had a negative impact on the public debt situation, or if foreign bank owners (the bulk of the successful banks in Estonia are Scandinavian owned) wavered on their commitments, which could have a similar effect, a downgrade could result.

In Any event, A1 it is! More information from Moody’s is here.

 

The principal methodology used in this rating was Sovereign Bond Ratings published in September 2008. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

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Estonia Vs Slovenia

An item first published on this blog on 6th July, 2012.

An interesting and detailed post here, from the redoubtable Edward Hugh, about one of the two other CEE countries, apart from Estonia, that have acceded to the Eurozone, namely Slovenia (the third country is Slovakia).

Having consistently outperformed Estonia and even ‘older’ Eurozone countries like Portugal, it seems not all is well with Slovenia.

Like Estonia, a small country (with a population of around 2 million) which was formerly a part of Yugoslavia and in fact the first constituent state to gain independence in 1991, Slovenia now seems to be drifting towards joining Spain, Greece, Ireland et al in an IMF or similar bailout, according to the article.

Moreover, in some areas where Estonia has seen an improvement over the last year or so, for example in GDP levels and construction volumes, Slovenia has seen a decline. Unemployment, whilst at a somewhat lower rate than Estonia’s (over eight per cent in Slovenia as compared with a little over 11 per cent in Estonia) has been consistently growing in Slovenia since 2008, whereas the trend in Estonia has been for a fall since mid-2010 (though with small recent increases).

Furthermore, Estonia has leapfrogged Slovenia in the credit ratings stakes, at least as Fitch sees it. As reported on this blog, Estonia currently holds a Fitch rating of A+ whereas Slovenia is now rated at A.

Goodson & Red Tallinn Property Consultancy is a premier residential and commercial property service based in Tallinn, Estonia, with a strong focus on consultancy services for overseas property investors. Our recent media accolades include mentions in both the UK quality newspaper the Daily Telegraph, and the New York Times.

 

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Estonian Exports Down Y-o-Y To May 2012, Nevertheless Growing

A recent report on the Estonian Statistics Office site has stated that May 2012 saw a decrease in exports y-o-y of some eight per cent at current prices.

This needs to be seen in the context of May 2011’s figures being at a record high however, according to the report.

Meanwhile, imports remained steady and thus there was a much larger trade deficit (five times higher – at 113 million Euros) than in May 2011. In all, Estonian imports in May 2012 came to 1.1 billion Euros and exports at 1 billion Euros.

Nonetheless the general month by month trend has been for an increase in exports, which have increased every month since the end of 2011, with the exception of April (imports have followed the same pattern), the report stated.

This is particularly relevant since much of Estonia’s economic recovery has been export-driven.

As regards export sectors, machinery and equipment accounted for the largest share (30 per cent) and also saw a y-o-y increase in exports of 11 per cent. Mineral fuels had the next highest share of the export pie at 12% and metals and metal products taking 10 per cent of the share, according to the statistics. Nonetheless mineral fuels saw a contraction export in May 2012 when compared wih May 2011 (of 52 per cent) and it is this phenomenon primarily which accounts for the y-o-y decrease in total exports.

Machinery and equipment constituted the largest share of imports (28%), followed by mineral fuels (15%) and agricultural products and food preparations (10%). As with exports, mineral fuels also saw a y-o-y decline in May 2012, of 17 per cent. Machinery and equipment saw a y-o-y increase however (5 per cent) and chemical industry raw materials and bi-products saw a 13 per cent y-o-y rise in imports, the report stated.

The most important destinations for Estonian exports were Finland and Sweden at 16 per cent of exports each, and Russia at 12 per cent, according to the report.

Estonia’s main trading partners for imports remained Finland at 14 per cent primarily for electrical equipment and fuels, Russia (fuels, timber and timber products, and an 11 per cent share of imports) and Germany (transport equipment and electrcial equipment – also accounting for 11 per cent of all imports), the report stated.

The original report (in English) with a breakdown of sectors and main trading partners is here.

 

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Inflation In Estonia At 3.9 Per Cent Y-o-Y In June 2012

According to a report in the Estonian Press Digest from News2Biz,  CPI (consumer price index) in other words inflation, in Estonia in June 2012 has seen a 3.9 per cent y-o-y increase, a small rise on the previous month’s y-o-y figure of 3.8 per cent.

Citing figures from Statistics Estonia, the report went on to state that services had seen a higher y-o-y increase (5.2 per cent) than goods (3.2 per cent) over the same period.

It also stated that increases in housing expenditure accounted for 40 per cent of the overall increase. This would include 11.2 per cent increases in the cost of electricity, heat, energy and fuels.

Transport saw a 4.1 per cent rise y-o-y, clothing and footwear a 5.3 per cent rise, food and non-alcholic beverages a 3.5 per cent rise and alcoholic beverages and tobacco a 5.4 per cent rise over the same period, the report stated.

On the other hand, communications saw a fall of -8.4 per cent over the same period, according to the report.

The original data from Statistics Estonia (in Estonian) is available here.

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