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).

Read More

Where To Buy In Tallinn, Estonia?

First published on this blog on July 21, 2012.

People often ask us what the up and coming areas in Tallinn are. What’s going to be the next hot spot to buy an investment property with a potential for strong growth and consistent cashflow from rentals?

We don’t have a crystal ball of course – and nobody does, not one that is effective anyway – but based on the empirical evidence of what has been happening in the couple of years of recovery since the slump we can make a sensible forecast.

City Centre and Old Town

First, the Old Town (see map 2 below) will continue to hold its value. It is a UNESCO world heritage site, hugely popular with tourists, well supplied with a variety of good quality restaurants, cafes, bars, craft shops, high end clothes shops and other amenities, and is close to the harbour not to mention the seat of Governmental power. What’s more people actually live and work there.

The ‘Kesklinn’ (City Centre, also called the ‘Südalinn’) similarly will retain its prominence and, whilst prices took a greater bashing here during the 2008-2010 slump than in the Old Town, is of key significance, containing as it does not only Tallinn’s Central Business District, but more entertainment outlets, foreign embassies and a large number of residents.

Add to that the district of Kadriorg, to the east of the Kesklinn, with its leafy, evocative streets, fine old housing, and the Palace built for Catherine the Great, not to mention the President’s residence, and you already have a large, contiguous area of desirable housing with strong rental potential. In fact, the three areas noted above come under the one administrative area as far south as the Ülemiste Järv (see map 2) which is the Tallinn city lake, and cover 28 square kilometres in total.

But these areas have already arrived, so to speak. Whilst developments in the Kesklinn in particular look set to continue, such as the new Finance Ministry as reported in a previous post, and there is plenty of scope for refurbishment work in all areas, it seems unlikely that there is to be any radical transformation here. That process has already happened, stretching back the 20 years since Estonia’s independence.

Emerging Districts

Now to the districts of Tallinn showing promising signs for investors. Again, these are largely adjacent to one another and can thus be treated as a single entity for our purposes. Essentially they comprise the ‘Sadam’ harbour area (see map 1 below) stretching westward along the waterfront along the ‘Culture Kilometre’ (a popular cycling and jogging route) to Kalamaja. This stretch is set for a lot of exciting development in the coming years, both residential (that process has already started with the quality new housing in the Jahu and Suur-/Väike-Paterei streets) and commercial. One recent development which has already happened is the newly refurbished Seaplane Harbour, which includes dry docks, Seaplane Hangars dating back to the late Tsarist time which hold a museum, and vessels of historical interest.

Kalamaja itself is similarly already experiencing a renaissance. It largely comprises character wooden houses, mostly around a century old but here have been some tasteful new builds constructed along the same lines, as well as new, more modern builds. The Kalamaja effect is spreading southwards to neighbouring Pelgulinn, which has similar housing stock and is quiet and family friendly, yet still a stone’s throw from the Old Town, eventually dovetailing into the borders of the more-established Kristiine suburb. The Kassisaba district (close to the British embassy) has seen construction and refurbishment activity aplenty recently as well (e.g. at Adamsoni 33).

Returning to Kalamaja, the border that separates it from Pelgulinn, demarcated by the goods rail line to Kopli, host what is really the hub of this new revival – the so called bohemian quarter. This comprises three of the hippest restaurants in town, Kukeke, run by the same people who are behind the successful Komeet restaurant in the Solaris centre, F-Hoone (literally ‘building F’) which are both in former light industrial buildings, and the more established Boheem cafe close to the station.

Other good quality refreshment outlets abound, and we have to mention the nearby Asian Cafe  on Kopli 4c close to the central train station, which offers tasty Indian, Chinese and Thai-style food for those in a hurry and at good prices.

Moreover this area is set to be the new alternative theatreland, with a theatre accomodating a good couple of hundred seats slated for construction next year.

Lastly, this effect may well spread Northwards throughout the Kopli peninsular (see map 1) over the longer term. The Kopli peninsular, once the site of aristocratic hunting forests, today displays very mixed use, with various commercial docks including the Bekker port, the HQ of BLRT, a shipbuilding company, plenty of old wooden workers cottages, office space, parkland and the magnificent Estonian Maritime Academy building. Beyond this at the tip of the peninsular lies the Paljassaare nature reserve, which is excellent for birdwatching and its natural environment in general, all year round.

Rough per square metre price of districts

As regards prices, a rough breakdown for average buying prices of the districts mentioned is as follows:

Old Town: 2 000 – 3 000 Euros/Square metre.

Kesklinn (excluding Old Town), Kadriorg: 1 800 Euros/Square metre.

Kristiine: 1 300 Euros/Square metre.

Kalamaja, Pelgulinn: 1 100 Euros/Square metre.

Kopli: 800 Euros/Square metre.

Naturally these are just ballpark figures at the time of writing and prices will vary with street, type of building, state of refurbishment etc.

As a rule of thumb, rentals will be at least 10 Euros/Square metre in the Old Town (and somewhat more than that for well-appointed properties) falling to around 6 or 7 Euros/Square metre further from the centre.

We hope that this gives a good overview of the state of play with the districts in central Tallinn to watch out for; naturally we welcome your questions, comments and feedback!


Maps (click to enlarge).


Map 1: Area to Northwest of Central  Tallinn,

including Kalamaja and Kopli peninsular.



Map 2: Old Town (Vanalinn), City Centre,

Pelgulinn and Kristiine (Lillekülla).









Map 3: Tallinn City.







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.



Read More

Increase In Number Of Houses On The Property Market In Estonia

According to Tõnu Toompark on his adaur blog, although the 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 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 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 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’.


Read More

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 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 for the whole of Estonia as compared with 1 598 apartments.

Moreover the 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 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 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’.


Read More

Apartment Prices Showing Slight Y-o-Y Rise in Tallinn, Estonia

Most of the major newspapers in Tallinn are taking a break today after Jaanipäev but here at Tallinn Property we don’t want to take a break from bringing you up to speed on all that is happening in real estate in Tallinn and Estonia in general!

According to a report on Tõnu Toompark’s adaur blog, signs of very slight price increases in property prices in Tallinn and Estonia as a whole can be gleaned from the latest index. The index currently stands at 61 points which is all of a 0.5 per cent y-o-y increase. Offer prices statistics for both Tallinn and some of the provincial towns show more concrete evidence of modest increases.

Meanwhile the volume of apartment offers remains at about the same level it was a year ago, though in Tallinn the level is about one per cent lower with 8 700 apartments currently under offer, writes Tõnu.  Average offer prices for the whole of Tallinn (apartments) currently stands at 1 317 Euros/square metre.

That said, agents have shown some optimisim in reporting a slight rise in offer prices on Tallinn flats, Tõnu continues. At the same time it needs to be pointed out that offer price rises remain below the growth in actual deal prices. Whereas the offer price on Tallinn apartments has seen a five per cent rise y-o-y, actual deal prices have seen a seven per cent rise over the same period, Tõnu says.

According to the data, within Tallinn, the district to have seen the highest rise in offer prices is Kristiine with an eight per cent increase from 9 May, 2011 to 9 May, 2012 (average price of 1 316 Euros/square metre). The Old Town actually saw a decrease of one per cent in offer prices over the same period (average price of 2 792 Euros/square metre). The greatest increase in volume of offers over the same period was in North Tallinn with an increase of 13 per cent (to 1 418 offers) though many areas saw a fall y-o-y, as high as -18 per cent in Pirita (278 offers). Outside of Tallinn, Tartu has also seen a fall in the volume of offers (-22 per cent) whilst simultaneously experiencing an increase in offer prices of eight per cent (average of 1 051 Euros/square metre).

Estonia as a whole has seen only small increases in both number of apartment offers at two per cent (18 511 currently) and an increase in average offer prices of three per cent (1 004 Euros/square metre).

The full article and statistics (in Estonian) can be viewed here.

The index, which commenced on 18 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 7 May, 2007, when it stood at 108.

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.

Read More

Q1 2012: Estonia Sees House Price Increase Y-o-Y Whilst Global Trend Is For Fall

According to property investment portal, Global Property Guide, whilst the global trend for house prices has been for an accelerating downturn as of Q1 2012, Estonia has been bucking that trend somewhat, even seeing something of an increase, at least as regards the y-o-y figure.

The Global Property Guide (GPG) stated that, of the 36 countries for which quarterly statistics are available, only 12 saw a y-o-y rise to Q1 2012. When looking at Q1 statistics compared with Q4 2011, the picture is even more stark, with only 10 counties seeing a rise in prices, and 26 seeing a fall, over that period.

These figures regard inflation-adjusted prices; nominal price statistics paint a rosier picture, with 20 countries seeing a y-o-y rise in prices.

Notable inflation-adjusted y-o-y price drops have been seen in Ireland (-18.9 per cent), Greece (-11.68 per cent), Poland (-10.94 per cent) and Portugal (-10.45 per cent), with Spain seeing a drop of -9 per cent y-o-y in line with that country’s economic woes.

Conversely, according to GPG, Estonia saw a rise in prices y-o-y to Q1 2012, of 9.13 per cent, the highest of any European country. Of the countries polled, only India, or more specifically Delhi at 24.41 per cent, and Brazil (São Paulo) at 18.70 per cent, saw a greater rise over the same period, though it has to be said that these increases were quite substantially higher than Estonia’s.

As regards the quarterly change, growth was much more sluggish as noted, and Estonia actually saw fall of -0.41 per cent as compared with Q1 2011, according to the GPG data.

Other countries to see significant y-o-y growth were Austria (8.24 per cent) Switzerland (5.49 per cent), Norway (5.43 per cent), Russia (3.86 per cent) and Iceland (2.25 per cent). Of these, Austria, Switzerland and Norway didn’t experience a house price slump in the first place, whereas Estonia, Russia and Iceland are seeing recovery.

The full report is available here.

Goodson & Red Tallinn Property Consultancy has more than eight years’ experience in comprehensive property brokerage and consultancy services for investors and sellers, long and short term lettings services and a comprehensive professional management service for landlords, and has recently been cited in UK quality newspaper the Daily Telegraph, and the New York Times.

Read More

Tallinn Real Estate Market Report First Quarter 2012

We have just been putting the finishing touches to a fresh copy of our quarterly review of the Tallinn property market and the review.

Our latest Tallinn Property and Rental Market Quarterly Review covers all developments in the third quarter of 2011, and as always the review contains a brief look at the Tallinn residential market:

  • situation regarding mortgage loans, consumer security
  • information on average asking and transactional prices
  • current state of the central Tallinn rental market
  • invaluable sample transactions
  • advice on rental business considerations

Get the Tallinn Property Market Review 2012 Q1

We would also very much like to hear your views re the property market. Or if you have any suggestions regarding topics. Please do not hesitate to write or tweet us, or leave us a comment below or on our Tallinn Property Facebook page.

Read More

Estonian Land Board – Seasonal Drop in Real Estate Sales For January

According to analysis of data concerning property prices and transactions from the Estonian Land Board as carried out by real estate firm 1Partner Kinnisvara, whilst January 2012 saw a 40 per cent increase in the number of real estate deals year -on-year, the number actually went down compared with December 2011.

According to 1Partner Kinnisvara managaing director Martin Vahter, as reported on Tõnu Toompark’s Adaur blog, this comes as so great surprise and is most probably seasonal. “The market is being currently shaped by a lot of different factors that are likely to have an impact, for example the exceptionally cold February weather” explains Mr. Vahter.

“At the same time there have been some good signs” Mr. Vahter goes on. “The winter has seen activity from those Finnish people who wish to invest in city centre apartments” he explains, whilst adding that this activity comes from the purchasing power of a market-conscious group of customers.

685 sale-purchase transactions took place in Tallinn in January 2012, which is nearly 25 per cent less than December 2011. The total value of deals fell by 12 per cent over the same period to a value of 49 million Euros.

Apartment price per square metre in January saw no significant variation for the tenth month in a row, where prices have remained above the 1 000 Euro per square metre mark; in this case it stood at 1 036 Euros. The most expensive apartment to be sold in Tallinn cost 350 000 Euros, whilst the cheapest in the city went for 1 500 Euros [editor’s note – such seemingly fantastic bargains are only likely to be found in the outer, Soviet-era dormitory districts, and are most probably affected by other issues].

Twenty one entire residential buildings were built in January 2012, seven less than the previous month. The most expensive deal came to 1.45 million Euros and the cheapest cost 100 000 Euros.

Four unimproved houses were sold in the same month, eight less than in December 2011.

The original article (in Estonian) can be viewed here.

Read More

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.

Read More

Real Estate Market Growing Slowly But Steadily In Tallinn, Tartu and Pärnu, Estonia

Today’s residential market seens to be relatively calm, with sudden changes not taking place, writes Tõnu Toompark on his adaur blog. However, developments in the city centre of Tallinn, particularly in the high end of the market are certainly a contributory factor to why Tallinn’s apartment transactions have increased by 18 per cent over the last year, he writes.

It is hoped that large price increases remain exceptional, because otherwise prices would rapidly rise to a level which would put them beyond customers’ reach, Tõnu writes.

The third quarter of 2011 saw the number of apartment transactions progress, as had already been the case in the previous quarters and indeed previous year, Tõnu points out.

Despite setbacks in the number of deals at the beginning of the year and in the summer, the third quarter saw some 3 429  apartment transactions, says Tõnu.

Thus it is possible to say that the residential apartment market is already sufficiently active, which means in turn that waiting for further increases in the number of transactions could prove to be in vain.

The number of transactions may temporarily grow for example as the result of major construction developments; however in the long term a higher level of transactions will not be sustainable, Tõnu argues.

As a comparison, the number of apartment transactions which took place in the third quarter of 2011 in Tallinn stood at 1 476, in Tartu, Estonia’s second city, the figure was 333 whilst for the third largest city, Pärnu, 139 transactions were carried out.

In total in Estonia the number of apartment transactions grew by 5 per cent over the year. However the prevailing uncertainty in the economy doesn’t give any reason for believing the number of transactions should grow. At the same time it is not so great as to cause the number of transactions to dry up altogether. Rather there has been a temporary downturn in the number of transactions, but this shouldn’t be a basis for our long term prognosis, Tõnu writes.

In the whole of Estonia the number of transactions increased most of all in Tallinn and Tartu, where the growth was four per cent and twelve per cent respectively. In Pärnu the number of transactions in the third quarter of 2011 stood at the same level as was the case a year ago.

Transaction prices are increasing slowly but steadily despite what the pessimists are saying, the average price per square metre in the third quarter of 2011 stood at 723 Euros per square metre.

Transaction prices, i.e. real estate values, are at a level which have been favourable both in terms of property asking prices, and earnings. It is clear that unemployment is high and real wages not rising, which leads to the problem of real estate purchasing using loan finance. Thus a lot of would-be real estate bargain hunters have missed their moment, Tõnu points out.

The average price per square metre for apartments in Tallinn stood at 1 070 Euros in Tallinn, 835 Euros in Tartu and 756 Euros in Pärnu, in the third quarter of 2011. Price increases in apartments seems sustainable. Apartment sale prices compared with the same quarter last year have seen positive increases for five quarters in a row, Tõnu explains.

Apartment price rises are not a primary cause for celebration during the exit from an economic crisis, but the fact that prices are so beaten down during a downturn, whereas relying on the wisdom of hindsight today, means that the only way is up anway, Tõnu says.

Fortunately price rises are not so rapid as to hinder demand. This is confirmed by the developments in the number of housing transactions. Apartment transaction prices have risen in Tallinn for six quarters in a row. Compared with the same period a year ago as we pointed out in the introduction, this rise stands at 18 per cent as of the third quarter of 2011. In Tartu the apartment transaction prices have also risen for six quarters in a row, but the increase as of the third quarter of 2011 is only three per cent. In Pärnu the transaction prices have risen three quarters in a row with a two per cent increase, says Tõnu.

Peak prices in all three cities were reached in the first and second quarters of 2007. But with more than a year of continuous price rises, the gap between that peak and current prices is getting smaller, Tõnu points out.

This runs counter to the claims of those pessimists who say that 2007 prices will never again be attained, says Tõnu. The real issue is what the real value of money today is compared with 2007 and this newly-achieved peak.

The average transaction price of apartments in Estonia today is 60 per cent of that of the former peak, and this would require a price rise of 66 per cent to reach that peak again, Tõnu writes.

Tallin’s price level stands at 65 per cent of the earlier peak, which would in turn require a price rise of 50 per cent to regain the earlier peak. For Tartu the figure is even higher at 70 per cent of the peak levels. This would need a price increase of a little more than 50 per cent to be reattained.


The big risk in today’s market is too high a price rise. Rapidly rising prices make affordability of housing difficult and thus reduce market liquidity, says Tõnu.

Market opportunities are at a relatively low level of finance (i.e. the turnover of housing loans is low) despite an increase in the volume of transactions, and therefore price rises are remaining relatively stable. Behind this lack of loan rise is in particular the demand for loans, which remains depressed at a time of economic uncertainty and stagnant real wages.

Thus we can expect that, barring anything catastrophic happening in the real estate market, the developments in the housing market will continue along the same lines, Tõnu explains. Transaction volume is likely to remain at the current level, since the potential for increase is scarce.

Apartment prices could slowly but steadily increase. It seems certain that the 18 per cent rise of the last quarter was too rapid, however.  But a growing market could help to bolster the turnover of housing loans and thus in turn improve that market.

The original article (in Estonian) is available here, together with useful diagramatic information.

Read More