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Housing Loan Market Growth Is Supported By Property Values And New Borrowers

The number of transactions at the Tallinn apartment market is high and on an upward trend; also, the transaction prices are rising. The vast number of transactions and other positive trends of property market are to a large extent backed by the loan market. The turnover of housing loans is thriving upon low interest rate and this gives more and more people an opportunity to buy a home with a housing loan.

The number of apartment transactions is showing a strong increase

The number of apartment transactions in Tallinn is robustly growing. In Q1 2017, 2,449 apartment ownership deals were signed in Tallinn. This corresponds to an annual growth of 19%. The number of transactions has gone up in terms of home buyers as well as rental investors. Demand has been supported by rising wages, high employment rate, but also favourable loan conditions and low interest rate.
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€100m makeover for Linnahall to be completed in 2019

Reconstruction of the long-abandoned Linnahall entertainment arena in Tallinn’s port area is expected to be completed in 2019 at a total cost exceeding 100 million euros.

“During the past six months, we worked toward making sure how to proceed,” said Deputy Mayor Taavi Aas, standing in for the mayor, at a press conference on Tuesday. “I am beginning to hope that the grand house with a grand history will come to life again. We have reached an agreement with the government that we will do it together.”

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Narva Highway becomes Tallinn Main Street – detailed plan announced

The Tallinn Main Street design contest winner has been been declared. In three years, according to the plan, the fresh concept will alter the face and ways of the heart of Tallinn.

The winner of the Tallinn Main Street design contest is «Kevad linnas» (Spring in the City) with the accent on creating a humans based space and bringing back the legendary, almost lost Bastion belt.
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Tallinn Property Blog Statistics

Statistics: Share of transactions with greenfield developments trending up

In Q3 2015, 9 769 transactions with housing were effected in Estonia. At the same time, 983 units of housing received permits for use. Assuming hypothetically that under the conditions of a stable market the number of transactions effected with housing is roughly the same as the number of units of housing completed, it may be said that 10% of all transactions with housing in Estonia are effected with new housing. (more…)

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Statistics: For an average apartment in Harju County, 7.4 years’ mean wages have to be paid

In an Estonian average, 5.7 years’ mean net wages have to be paid on a transaction with an apartment. In Harju County, wages are higher; however, real estate there is also the most expensive. As a result, far more – 7.4 years’ wages – has to be paid on an average transaction with an apartment in the capital and its vicinity.

On an average transaction with an apartment, sellers of real estate charge 5.8 years’ wages in Tartu County and 4.1 years’ wages in Pärnu County. (more…)

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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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