The autumn real estate race that started in September did not lose any speed also in November. On the contrary, the higher-than-average share of new developments characteristic of year-end, still a low number of offers, strong demand and good loan conditions have kept the market active, as well as increased real estate prices.
2,692 apartment transactions were concluded in November, which was the highest number this year, only beaten by six months from years 2006 and 2007. 24,778 transactions were concluded in the first 11 months of the year, which was 25.1% more than in the same period in 2020 and 15.8% more than in the same period in 2019.
Estonia
The median price of transactions broke records, rising above the threshold of 1,700 €/m2 for the first time (1,717 €/m2 to be exact). Both the slightly higher share of transactions in Harju County and the share of new developments played their part. The median price of the transactions in the first 11 months of year 2021 was 1,597 €/m2, i.e. 9.8% higher than during the same period last year. The increase in the median price in last years has been around 7.9%, which means that own real estate, even though it is not regarded as traditional investment, is still a rather good piggybank, ensuring solid growth of assets.
Regardless of the cloudless real estate sky, there are increasing signs of possible changes in the market. One of the problems is reduced affordability of real estate, which used to have a good correlation with price increase but has deteriorated by 10% in average during the past year. There is also a risk that negative EURIBOR that already seemed to be a basic human right shall be adjusted rather sooner than later; it is a political decision, but there are more and more voices saying that the speed of inflation should be slowed down by cutting or even terminating the property purchase programme. Sooner or later, we shall see an increase in interest rates, which will increase the price of our loans and as the demand drops, will also reduce the volume of real estate developments.
Apartment market in Tallinn
In the last months of the year, the market of Tallinn has been influenced by a higher share of new developments than average, which is also the case this time. 1,103 transactions were concluded in November, which is the best result of this year and the best figure since the last real estate boom. 302 transactions of those were concluded with new developments, which is also the best result of this year. 1,000 transactions have been achieved four times this year, in comparison to 11 months of last year, the number of transactions has increased by 24%, in comparison to pre-pandemic year 2019, however, by 9.8%.
The increase in the number of new apartments also meant a record-breaking result in terms of prices. Based on the transactions, the median price was 2,333 €/m2, last record was broken in last December, thus this December should also be closely watched. In comparison to 11 months of last year, the median price has increased by 8% this year, the average annual price increase in the past five years is 8.8%. For instance, the median price of 2- and 3-room apartments in standard apartment buildings in Haabersti, Lasnamäe and Mustamäe has increased by 13.6% in one year (1,474→1,675 €/m2), the peak price of 2-room apartments is already over 90,000 € and the peak price of 3-room apartments is over 115,000 € (occasionally even over 120,000 €).
Apartment market in Tartu
The market of Tartu is somewhat different from other cities as the volume and share of new developments has not dropped much in comparison to the same period last year, which has brought along a quicker statistical price increase. 216 transactions were concluded in November, the final results should show whether the record-breaking number of transactions this year (231 transactions) will be beaten or not. Let it be said that there have been only two months with less than 200 transactions this year. In the 11 months of this year, in the comparison of years, the number of transactions has increased even by 36%, in comparison to year 2019 by 23.6%.
For the fifth consecutive month, the median price of transactions was over 1,700 €/m2, the initial result of November was 1,727 €/m2. In comparison to 11 months of last year, the median price has increased by 12% this year, the average annual price increase in the past five years is 9%. If in Annelinn the prices of the best 2-room apartments are over 70,000 € (average annual price increase 5,000 €) and 3-room apartments over 85,000 € (average annual price increase 10,000 €), as a rule, the prices of new apartments have remained between 1,700 €/m2 and 3,400 €/m2 (median price slightly over 2,200 €/m2).
Apartment market in Pärnu
The market of Pärnu is also characterised by an active year end. 101 transactions were concluded in November, the threshold of 100 transactions has only been crossed 3 times before. 1,012 transactions were concluded in the first 11 months of the year, which is 28% more than during the same period last year. In comparison to the pre-pandemic year 2019, 19.5% more transactions have been concluded.
As there have been fewer transactions with new developments than last year (the share this year being only 16%), the overall number of offers is low, which speeds up the price increase. In November, however, their share was still higher (19 transactions with new developments), and the median price was the best of all time – 1,640 €/m2. The previous record is also from the last months of the year – from December 2020 when the median price remained at 1,516 €/m2. Based on the 11 months, the annual increase in the median price has been 12%, from 1,253 €/m2 to 1,401 €/m2. Prices of new apartments in Pärnu start from 1,700 to 1,800 €/m2, in more exclusive locations the prices are between 2,500 and 3,400 €/m2 as a rule. The prices of the best standard apartments start from 1,600 €/m2, reaching up to 2,000 €/m2.
Apartment market in Narva
In Narva, the market has become more active in the past few months, due to the pension reform. Both the asking prices and transaction prices have been increased, whereas the number of offers is the lowest of the past years. Similarly to October, over 100 transactions were concluded also in November, the actual number being 112 transactions, which makes it the best result of all time. Compared to the 11 months of last year, the number of transactions has increased by 41% and in comparison to pre-pandemic year 2019 by 25%.
The median price of transactions, which increased by about 80 €/m2 in October in comparison to the annual average (to nearly 500 €/m2), stayed at an equally high level also in November (at 485 €/m2). The median price of 11 months of year 2021 is 431 €/m2, during the same period last year the median price was 398 €/m2, i.e. 8% lower. Transaction prices of the best 2-room apartments are already over 40,000 € and for best 3-room apartments over 50,000 €. Last year it was necessary to pay over 30,000 € for 2-room apartments that were in very good condition, and 45,000 € for 3-room apartments.
