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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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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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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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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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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Many In Estonia Still Unaware Of Imminent Electricity Market Liberalisation

An article first published on this blog on 11th July, 2012.

As we previously blogged about, the electricity market in Estonia, hitherto having been a state monopoly, is due to be open to the market come January 2013, with all the pros and cons that this entails (our previous article lists some of these if you’re interested, or perhaps you already have a view one way or another!).

Nonetheless it seems many Estonians themselves don’t have a strong view on developments, or even worse than that, they’re not even aware it’s happening in the first place!

According to a report by Kristopher Rikken on the esteemed Estonian Public Broadcasting (ERR) site, over 20 per cent of people here are unaware of the prospective privatisation and many more believe there should be more info out there on this subject.

Speaking as a blogger who remembers the fanfare which surrounded the various privatisations of State energy (and other) enterprises under the Thatcher years in the UK, I find this surprising and a real missed opportunity on the part of those companies waiting in the wings to supply electricity to the Estonian people come next January (if in fact they are able to do anything at this stage).

Nevertheless this is the case. Mr Rikken derives his info from a TNS ENOR Poll (we were unable to track down the original poll but here is their Estonian site – TNS is global insight, information and consultancy group) which states that the exact figure of those who are completely unaware of the electricity market liberalisation is 21 per cent, according to the report.

The level of awareness amongst ‘lower income 25 to 34 year olds in small towns’ has risen according to the report, although only 17 per cent of all respondents correctly identified that the changes will affect the price component of their bills (probably adversely in that price increases are likely, although at least consumers are likely to be able to shop around for a better deal from competitors).

Another strange irony is that lack of awareness was particularly high in Ida-Virumaa, the very region of North Eastern Estonia where the bulk of the country’s electricity is generated (in oil-shale burning plants). Moreover ‘non-Estonians’ scored poorly in the awareness stakes, according to the report; this in practice is likely to mean Russian-speaking persons who again predominate in Ida-Virumaa, making up over 70 per cent of the population (and over 90 per cent in some individual towns). Evidently information has either not been provided adequately, or at least disseminated, in Russian.

Furthermore, Eesti Energia as already noted has been particularly helpful in providing information, in Estonian, Russian and English, on what privatisation will mean, presumably anxious to steal a march on its competitors before they enter the market (its Latvian equivalent, Latvenergo, is also poised to enter the market according to the ERR report).

There is still of course plenty of time, it is mid-July and the changeover doesn’t take place until January 2013. However it might be worthwhile for landlords and investors to make a note of the date now and put in place plans for possible savings on energy utilities if they are liable for them.

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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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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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