Market Review September 2017
At the end of September, it is possible to make the first conclusions about the real estate market this year, as three fourths of the year have passed – in other words, the biggest part is done. In comparison to year 2016, the number of transactions and the median price have both increased in 2017, based on the results of nine months. In nine months, 16,501 transactions were concluded in Estonia, and compared to last year, the number of transactions increased by 1,215, i.e. 7.9%. Thereby, the median price of transactions increased by 6% (1,140→1,208 EUR/m2). Considering the active August, the number of transactions in September dropped a little (2,082→1,915), and also the median price dropped (1,255→1,219 EUR/m2), but August was exceptionally active regarding the sale of new apartments.
The market is kept active by the favourable economic situation positively influenced by rapid salary growth, low interest rates, low unemployment rate and several other factors due to which, according to the Estonian Institute of Economic Research, the perspective of households is optimistic. Therefore, at least in the nearest future, it is possible to predict a continually high interest of people in acquisition of real estate, and due to the active situation in the market of new developments, continued growth in the number and price of transactions, although not as rapid as three-four years ago.
Information: Land Board
The largest number of the 1,915 purchase and sales transactions were concluded, as usually, in Harju County –1,014 transactions, i.e. 53.0% of the total number of transactions. The majority of the transactions in Harju County came from Tallinn, the share in September having been 81.4%. Compared to August, the number of transactions in Harju County decreased by 121 (–10.7%), the median price dropped by 1.9%, stopping at 1,595 EUR/m2.
By number of transactions, Harju County was traditionally followed by the counties with larger population, i.e. Tartu County with 227 transactions, Ida-Viru County with 193 transactions and Pärnu County with 117 transactions. Compared to August, the number of transactions increased in five counties, the biggest growth in the number of transactions took place in Pärnu County where the recess in August was replaced in September by the regular number of transactions this year. Over 10 transactions more were also concluded in Ida-Viru County where similarly to many other counties, year 2017 has been more active than last year. The greatest decrease in the number of transactions (besides Harju County) was in Tartu County (–34) and Järva County (–26). For both counties, August was the record month of the year, and September brought back the regular level.
Based on the median price, Harju County was followed once again by Tartu County (1,218 EUR/m2) and Pärnu County (1,026 EUR/m2). In September, the median price increased in eight counties, most of all in Lääne County (+74.1%), Põlva County (+54.2%) and Järva County (+54.1%), the decrease in the median price was the biggest in Valga County (–38.1%) and Lääne-Viru County (–23.8%), although in small counties, the actual differences in absolute numbers are marginal due to the low median price, and during the next month, regression towards the average will probably take place.
Information: Land Board
In Tallinn, the number of transactions dropped a little less than in Harju County. Compared to last month, 43 transactions less were concluded in Tallinn, and the median price decreased by 2.9%. Again, the market of Tallinn was considerably influenced by the change in the number of real right contracts of new developments – legal persons transferred 264 transactions less across all real estate objects, of which apartment ownerships formed the most remarkable part. In total, 825 transactions were concluded in September, with a median price of 1,662 EUR/m2.
Information: Land Board
The interest in new developments can be best explained by the statistics regarding the transferors of real estate transactions, even though it also reflects immovable properties in addition to apartment ownerships. As already mentioned, legal persons concluded 264 sales transactions less than in August, which reduced the number of legal persons in the total sales to 44.8%, dropping to the lowest level of the year, pointing at the thin market of new developments in Tallinn. As a whole, the market of new developments is continually active; during the past 12 months, legal persons have sold 51% of apartments, i.e. more than private persons.
In total, the share of legal persons in sales transactions was 44.8%, the share of private persons who were citizens of Estonia was 42.8%, the share of foreigners was 8.3%, and the share of the remaining parties was 3.1%.
Information: Land Board
The change in the number of real right contracts concluded with new developments obviously also influenced the statistics of the districts of Tallinn where the sample is even smaller. In September 2017, the largest number of transactions was concluded in the centre (185), followed by other districts with larger populations: Lasnamäe (165), Northern Tallinn (148) and Mustamäe (135). Compared to August, the number of transactions increased only in Kristiine (+9) and the centre (+1), the number of transactions dropped most in Mustamäe (–20) and Nõmme (–18). In the centre, the dynamics of the transactions compared to August greatly remained the same, however, in Kristiine, the number of transactions was increased by the growth in the volume of new developments. In Mustamäe, the number of transactions was also reduced by new developments, in Nõmme both by new developments and the secondary market.
Information: Land Board
Similarly to previous periods, the median price was the highest in the centre (2,286 EUR/m2) where compared to August the median price increased by 2.2%. The centre was followed by Kristiine (1,877 EUR/m2) and Nõmme (1,743 EUR/m2). In Lasnamäe, the median price was 1,398 EUR/m2, reduced by 2.7%, in Mustamäe, the median price dropped by 3.3% (1,481 EUR/m2). In September, the median price dropped most in Northern Tallinn (–15.6%), the reason being a big reduction in the number of transactions with new developments and a drop in the number of transactions in Kalamaja, the most valued region of the area.
Information: Land Board
Even though the real estate market across Estonia has been continually active, Tartu City is a remarkable exception. Compared to last year, in nine months, an average of nine transactions less were concluded per month. The reduction is mainly based on apartments of the secondary market; the median prices, however, have increased compared to last year. As a whole, 157 purchase and sales transactions were concluded in September, with a median price of 1,238 EUR/m2. Compared to August, the number of transactions dropped by 12, the median price dropped by 7.5%.
Information: Land Board
In Narva, the number of transactions has increased in comparison to last year, the median prices have remained stable. It is a sign that the recess is ending, as first the number of transactions starts to increase, followed by an increase in prices. In September, 55 transactions were concluded in Narva, i.e. four transactions less than in August. However, the median price increased by 6.7% (389→415 EUR/m2). Compared to the top level of years 2014–15, the prices are still about 75–100 EUR/m2 lower.
Information: Land Board
In Pärnu, compared to last year, both the number of transactions and the median price have increased (even 12.6% during the year). Several new developments have joined the market, facilitating the rapid growth of prices. In September, 89 transactions were concluded in Pärnu, which is the highest figure of the year, and compared to August, the number of transactions increased by 27. The median price, compared to the past five years, was inferior only to May of this year, increasing in comparison to the modest August by 17.9%, reaching 1,144 EUR/m2.
Information: Land Board
In the 3rd quarter of year 2017, the most active ones of the remaining areas were the largest county centres, and the so-called “golden circle” municipalities of Harju County. The largest number of transactions was concluded in Kohtla-Järve city where similarly to Narva, the number of transactions has increased due to the low comparison basis of last year, even though the prices have remained stable or even dropped a little. In the 3rd quarter, 186 transactions were concluded in Kohtla-Järve, with a median price of 66 EUR/m2. Of county towns, this year the greatest increase in the number of transactions was concluded in Valga where similarly to Kohtla-Järve, the median price is very low (116 EUR/m2), and a significant number of transactions is done without housing loans; therefore, the real estate there is highly liquid. The activity of the local governments of Harju County is based on the hot market of new developments; during the first nine months of the year, the number of transactions in Viimsi municipality increased by 82, and in Saue municipality by 48. In all the municipalities mentioned, except Kohtla-Järve, also the prices increased, which proved that following the example of Tallinn, the real estate market is reviving also in the rest of Estonia.
