Real Estate Prices In Estonia See Fall In July 2012

According to a recent article in the Estonian Press Digest from News2Biz, July 2012 saw something of a fall in real estate prices in Estonia as a whole, but at the same time real purchasing power (in Tallinn) for those wishing to purchase property also fell.

Citing real estate giant Pindi Kinnisvara‘s index as falling by 5.4 per cent between June and July, the report also stated that the real purchasing power of a Tallinn resident earning an average wage would stretch to a property of 68 square metres in area.

The Pindi Index is based on the weighted average transactions across the 17 largest Estonian towns (Tallinn is of course the largest with over 400 000 inhabitants, whereas 17th placed town is Kiviõli in Ida-Virumaa with only a little over six and a half thousand souls).

The average price of apartments per square metre in June 2012 for the whole of Estonia was 886 Euros, falling to 838 Euros per square metre in July, according to the report.

Not surprisingly the lower prices were accompanied by a somewhat higher rate of transactions – 991 in July, compared with 934 the previous month (this only covers the 17 cities incorporated in the Pindi index) the report stated.

According to the article, residents of Tartu and Pärnu can stretch to apartments a little larger in size when measured by their purchasing power levels (at 73 and 84 square metres respectively).

The Pindi Index reached an all time peak in April 2007 at the height of the boom, and an all time low in July 2009 (624.2 Euros per square metre).

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Statistics: Real Estate Investment In Estonia Increases 24 Per Cent Y-o-Y

According to a report by Tõnu Toompark on his adaur blog, investment in real estate in Estonia has increased by 24 per cent y-o-y to the first quarter of 2012.

Citing figures from the Estonian Statistics office, investments from  Estonian companies into plant and equipment fixed assets came to a value of 506 million Euros in the first quarter of 2012, writes Tõnu.

A bit less than a third of this total came in the real estate sector, including buildings and facilities acquisition, construction, repair work and the acquisition of land, Tõnu continues.

After a three year fall in investment in the real estate sector, the last five consecutive quarters have seen growth in investment, Tõnu writes.

The original article (in Estonian) together with diagrams illustrating investment levels in fixed assets including buildings, facilities, and land, and changes thereof, is here.

 

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Statistics: 96 Per Cent Of Residential Dwelling Space In Estonia Is In Private Sector

According to Tõnu Toompark on his adaur blog, 96 per cent of residential dwelling space in Estonia is in private hands.

The total number of residential items comes to 657 800 units, only a small increase on the last 12 years, with only three per cent of dwellings owned by local governments and one per cent by the state, writes Tõnu.

Given the upheaval of the collapse of the USSR 20 years ago and the wholesale transferral of ownership from state to private sector this is perhaps unsurprising, and is no doubt a factor in the somewhat active real estate market here, compared with some neighbouring countries (e.g. the Scandinavian nations) where public sector housing will account for a much higher proportion.

The original article (in Estonian) is available here.

 

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Increase In Number Of Houses On The Property Market In Estonia

According to Tõnu Toompark on his adaur blog, although the kv.ee index* of property prices in Estonia has seen only scant changes over the past year (a 0.98 per cent y-o-y fall to June 2012) this does not tell the whole story as regards the market here.

For one thing, the index has been fairly stable over the past couple of years (the index is based on asking prices rather than transaction prices**) which means that vendors have not had unrealistic expectations. On the other hand, transaction prices (which are naturally lower than asking prices) have at least in some areas been creeping up towards the levels of asking prices, which has led to a quite active property market over the last few quarters, writes Tõnu.

One area where the statistics bear this out is in the number of houses which have appeared on the market recently – 409 in the year to June 2012. Now, 409 may not sound like a lot of items, but it is worth taking a look at the number of houses on the market at any one time. At the time of writing (13.00 on 25th July) there were, on the kv.ee portal itself, 14 516 apartments for sale in the whole of Estonia (5 646 in Tallinn) as against 8 000 houses (621 in Tallinn). In other words the property market in Estonia, and in Tallinn in particular, is dominated by apartments. The city24.ee portal paints a similar picture, with 14 115 apartments for sale across Estonia versus 6 101 houses.

It needs to be pointed out here that the two portals’ statistics are likely to represent a figure for items on the market which is higher than the actual figure (due in part to the same property being listed by multiple agents and so counted more than once, or ‘dead’ properties which have been listed for several years); nonetheless Tõnu cites 5 654 houses being on the market in Estonia in June 2012.

This increase in supply of houses on the market has not been uniform throughout the country, although in all but two counties (Maakond) in Estonia, there have been increases, some of them substantial. For example in the county of Läänemaa there was a 58 per cent increase in numbers of houses on the market, according to Tõnu’s data.

The two exceptions were Viljandimaa which saw a -24 per cent fall in supply, and Lääne-Virumaa which saw a -6 per cent fall (there are 15 counties in Estonia).

In addition to that, no data was available for changes in supply of houses in Põlvamaa (though only 15 houses were listed as for sale in June 2012 here).

The figure for Estonia as a whole was an increase of 8 per cent in the supply of houses on the market (409 items as noted).

As regards prices of houses, changes were more variable. As might be expected from microeconomic theory, an increase in supply led to a fall in asking prices in a lot of counties (as much as -27 per cent in Järvamaa in central Estonia). However five counties actually saw an increase in asking prices, including the key counties of   Tartumaa, Harjumaa (where Tallinn is located) and Pärnumaa (increases of six, two and one per cent respectively). Reasons for this are largely speculative, although it is worth noting that when taken as a whole, Estonia saw no change in asking prices.

In summary: both asking prices and transaction prices remaining pretty static in the market for houses in Estonia, but there is an increasing availability of houses to buy nonetheless.

The original article by Tõnu Toompark (in Estonian) is here.

*The KV.ee index, which commenced on 18th 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 7th 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 5th September and 27th October, 2010.

**Please see our recent article on the translation of the Estonian words ‘pakkumine’ and ‘pakkumushind’.

 

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Tallinn Property and Goodson and Red Present The Idyllic “Katmandu” Villa

Tallinn Property and Goodson & Red are delighted to present this truly stunning, exclusive and exquisite secluded rural Villa development, just a stone’s throw away from the beach and the peace and quiet of the Baltic Sea and yet only a short drive from the city of Tallinn.

Named ‘Katmandu’ and set in approximately three quarters of a hectare of land, the hunting lodge-style Villa is located near the small town of Keila-Joa, some 25 km from Tallinn.  The development was designed by noted Finnish architect Ilkka Salo and completed in 2000, with some subsequent minor renovation. The main building boasts four spacious bedrooms, hallway, living room, dining room, study, utility room, and both a standard and a catering kitchen.

The complex furthermore has a separate, detached garage which can hold no fewer then eight cars, and a separate summer house.

The garage has a guest annex above it with three rooms (including a bathroom). The summer house comprises kitchen with grill/barbecue facilities, sauna and changing room, bathroom, fireplace and fitted wardrobes.

There is also a stable with space for two horses, and the plot includes a paddock.

Interior features of this marvellous development includes kitchen furniture from Puustelli, kitchen appliances from Siemens and a music system by Bose. Bathrooms are equipped with luxury Villeroy and Boche fixtures. WiFi (Elion network) an alarm system and Satellite TV.

Heating options include underfloor heating, oil based or electrical possibilities. The upper floors make use of radiators.

The total land area comprises an area approaching 0.75 hectares (1.8 acres), whilst the buildings total an area of 755 square metres. A large courtyard is enclosed on three sides, whilst the garden is impressively landscaped, including attractive bridges and driveways, and set in a secluded, forested area. The territory is secured by an extensive security fence and controlled gates, along with security cameras.

The property is close to the small town of Keila Joa with its manor, and the Lohusalu Marina is also close by.

The development is constructed with Lecatern blocks, with a quality stone roof.

The Katmandu Villa would naturally be an idyllic location for a family, especially one which enjoyed equestrian and water-borne pursuits.

Naturally words can only do so much to describe this wonderful property, so be sure to check our site here for more details and plenty of photographs.

Goodson & Red Tallinn Property Consultancy is dedicated to delivering premier residential and commercial property services in Tallinn and Estonia. Through more than 8 years of consistency in one of the most active property markets in Eastern Europe we have developed an enviable reputation for our in-depth market knowledge and expert, considerate personal service. Our services include comprehensive property brokerage services for sellers, home search, long and short term lettings services and a comprehensive professional management service for landlords.

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.

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When Is An Offer Not An Offer? – Understanding Estonian Real Estate Jargon

Here at Tallinn Property we make it our mission to ensure you understand the Estonian property market fully, regardless of whether you speak any Estonian or not!

It has been brought to our attention that there may be some confusion about what is meant by ‘offers‘ in the real estate context here.

The word ‘offer’ in Estonian is pakkumine, or plural pakkumised (though this can change – Estonian is a notoriously complex language with 14 case endings, but no words for articles (a/the) or prepositions (in,on, at etc.) meaning that nouns will change their endings depending on where they are in the sentence – a function provided by articles and prepositions in English).

In any event, translated as ‘offer’, what pakkumine actually means is quite different from the English meaning in the context of real estate, at least in the UK.

Whereas in Britain, making an ‘offer’ is that process by which a buyer or potential buyer will suggest a price for a house or flat which is usually somewhat lower than the asking price as listed by the estate agent. The vendor can accept or reject this offer, but the most common practice would be to make a counter-offer, and this negotiation would go on until either a price acceptable to both parties was met or an impasse was met.

Thus the offer price of property in the UK and indeed, in this sense, Estonia and everywhere else, will generally be lower than the asking price.

However in Estonia, ‘offer’ actually means an item on the market. In other words offers are the supply of items, most usually apartments. Thus ‘offer price’ (pakkumishind) actually means ‘asking price’. This explains why ‘offer prices’ in Estonia are invariably higher than transaction prices (tehinguhinnad) since vendors here are no more or less generous, and buyers no more or less parsimonious, than anywhere else!

In other words pakkumishind really means ‘asking price’ i.e. what the vendor hopes to receive. And ‘offers’ in general means the supply of flats and house on the market, not the volume of people offering to buy an item.

We hope that clears everything up for all our readers, and rest assured that we will blog about any other things which might get lost in translation – or if you have your own query, just ask us!

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.

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Statistics: Residential Space In Estonia Has Increased 0.4 Per Cent Y-o-Y

Citing figures from the Estonain statistics office, Tõnu Toompark has reported on his Adaur blog that the total number of newly constructed residential units compared with the existing housing stock has increased by 0.4 per cent y-o-y, to 2012. The actual area of residential space versus existing stock increased by 0.68 per cent over the same period.

These may not seem like huge figures, but we are talking about increases as compared with the existing stock of course; the figures for the ‘boom’ years were much higher, with an approximately 1.1 per cent increase in numbers of units compared with stock in the peak year of 2007 (and over 1.4 per cent when measuring new developments by area) and at no point during the slump did the figures actually move into negative numbers.

That said, a one per cent increase in new housing over existing stock is required to account for depreciation in that existing housing, according to Tõnu. The magic one per cent figure will allow the maintaining of the quality of housing, or indeed an improvement through refurbishments and renovation work, Tõnu explains.

However, at best, there are only three years so far where that has happened, at least when going on area of residential stock (rather than numbers of units) namely 2007 as we have noted, and the two years either side of that. Thus in general there has been a deterioration in the overall quality of the housing stock over the last few years, when applying this rule, Tõnu notes.

That said, the situation is markedly better than was the case prior to the boom; 10 years ago in 2002 the number of new units compared with housing stock had only risen by 0.18 per cent y-o-y and the figure for area of new residential space had only increased by 0.3 per cent on the existing stock, writes Tõnu.

The original article (in Estonian) is here including a graph of y-o-y figures for ratio of new residential developments (by number and by area) to total stock.

It will be interesting to see if the mini-boom in construction which is taking place at present, and likely to be accompanied with a growth in commercial construction due to a dearth in good office space, will contribute to pushing the ratio of new housing to existing stock closer to the desired one per cent mark.

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.

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Energy Consumption Limits In Estonia To Get Stricter

According to a report by Ott Tammik on the Estonian Public Broadcasting (ERR) site, stricter energy consumption limits are to be set for buildings in Estonia for next year, 2013.

The announcement was made in a draft mandate from the Ministry of Economic Affairs, according to the report.

The ultimate goal for the state is to have ‘near zero energy buildings’ by 2021, which in practice means a limit of 50 Kilowatt hours (KwH) of energy consumption per square metre per year, for every building, the report stated, although it is believed that this target will be met two years earlier than that.

The current limit is 180 KwH per square metre per year, set to be reduced to 160 KwH per square metre per year from next year, the report said.

Presumably the limit will be reduced by small increments until the 50 KwH target is reached.

The original article (in Estonian) which ERR cites outlining the announcement is from Estonian national daily Postimees, here.

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Statistics: Volume Of Residential Space In Tallinn Has Increased 0.29 Per Cent Y-o-Y

The volume of residential space in Estonia, according to data from the Estonian Statistics Office, stood at 657 800 items with a total area of 40.53 million square metres, as reported by Tõnu Toompark on his adaur blog.

This represents an increase in the number of residential items of 0.29 per cent y-o-y, and an increase in area of residential space of 0.52 per cent, writes Tõnu.

A typical residential property according to the data will be around 30.3 square metres in area; 10 years ago it stood at 27.5 square metres, Tõnu continues.

There are currently 491 residential units per 1 000 people in Estonia, or 2.04 people per unit. In 2002 that figure stood at 457 units per 1 000 people or 2.19 people per unit, Tõnu continues.

The original article (in Estonian) with diagrams showing changes in numbers of residential units and total living space area, plus changes in average living space area and number of residential units per 1 000 inhabitants, is available here.

 

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Increase Of 409 In Supply Of Houses In Estonia Y-o-Y

According to a post by Tõnu Toompark on his adaur blog, the supply of houses on the real estate market in Estonia has increased by 409 y-o-y.

The Estonian real estate market in general, including Tallinn, is overwhelmingly apartment driven. For example as of 17.00 on 23rd July, 2012 there were 14 014 apartments listed in real estate portal kv.ee as being on sale in Estonia, as compared with 7 645 houses (these figures do not take into account items which are listed by multiple agents however, so the real figure is likely to be somewhat lower – see below for an accurate figure for number of houses on the market in June 2012).

Figures for rentals paint an even greater disparity, with a mere 57 houses for rent listed on kv.ee for the whole of Estonia as compared with 1 598 apartments.

Moreover the kv.ee index* has fallen by 0.66 month on month to 60.7, a y-o-y fall of 0.98 per cent, writes Tõnu.

Tõnu goes on to point out that substantial changes in the index are rare, as has been witnessed over the last couple of years, the result being that sellers (vendors) are not seeing their expectations raised so far as asking prices** are concerned.

That said, there have been increases in transaction prices, which has led to a somewhat active market over the last few quarters, Tõnu goes on.

Turning to house (as opposed to apartment) prices specifically, Tõnu notes that asking prices as a whole in Estonia have remained at the level they were a year ago. In the key counties (Maakond) of Harjumaa (where Tallinn is located) Tartumaa and Pärnumaa, there have been increases in asking prices of two, six and one per cent respectively.

On the other hand, eight counties have seen a decrease in asking prices, Tõnu continues.

In any case the supply of houses on the market has increased in all but two counties (Viljandimaa and Lääne-Virumaa which have seen a 24 per cent and six per cent fall respectively).

As a result the number of houses on the market throughout Estonia increased by 409, or eight per cent, y-o-y to June 2012, when kv.ee listed 5 654 houses for sale.

The original article (in Estonian) including figures for number of houses on the market and asking prices, plus y-o-y changes, for each of the  15 counties in Estonia, is here (incidentally there doesn’t appear to be a strong correlation between changes in supply of houses on the market and changes in asking price; in other words areas where there have been increases in the volume of houses on the market haven’t necessarily seen a reduction in asking prices and vice versa, though in some areas they have; other factors seem to be at play in determining prices as well as classical supply and demand).

*The KV.ee index, which commenced on 18th 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 7th 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 5th September and 27th October, 2010.

**Please see our recent article on the translation of the Estonian words ‘pakkumine’ and ‘pakkumushind’.

 

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