Traditionally, January is one of the least active months in the real estate market – in 2017, the number of apartment transactions in January was third from last, in 2018 second from last and in 2019 the very last. January is mostly associated with lower spending – greatly due to the last quarter of the year where expenses are high. This year, however, this logic may not apply, as 1,810 sales-purchase transactions were concluded in January, i.e. 150 transactions more than in Januaries of the past three years in average. The median price of transactions, however, remained somewhat lower than last January, reaching 1,402 €/m2. As the prices continue to increase, the reason could be the structure of transactions, i.e. cheaper apartments formed a larger share than usual.
Apartment market in Estonia
The number of transactions was the highest in Harju County where 55% of transactions (1,002 transactions) were concluded. Harju County was traditionally followed by Ida-Viru County (187 transactions), Tartu County (168 transactions) and Pärnu County (119 transactions), whereas only one apartment transaction was concluded in Hiiumaa. In comparison to the same period last year, the number of transactions increased in 11 counties. In addition to the largest counties, the number of transactions increased most also in Lääne-Viru County (+21 transactions). The median price of transactions was also the highest in Harju and Tartu Counties, which were also the only counties where the figure exceeded the threshold of 1,000 €/m2 (1,868 €/m2 and 1,392 €/m2, respectively). In comparison to the same period last year, the median price increased by 5.4% in Harju County and by 9.7% in Tartu County. Those are also the counties that greatly due to their size shape the all-Estonian price level. In 2019, for example, 2/3 of the apartment transactions in all Estonia were concluded in the two counties. In comparison to last year, the median price of transactions increased in seven counties. A larger decrease took place in Saaremaa and Lääne County, which due to the small size of the market was rather characteristic and does not reflect long-term trends.
Apartment market in Tallinn
In January, 743 purchase and sales transactions were concluded in Tallinn, with a median price of €1,915/m2. 195 transactions were concluded with new developments, i.e. a little more than one fourth of the total number of transactions. In comparison to the Januaries of the previous three years, the number of transactions was a little lower. However, the median price of transactions was 2% higher, breaking the record of Januaries. The continued price increase, however, indicates that probably the median price in year 2020 will remain around 2,000 €/m2 – in 2019, the relevant figure was a little below 1,900 €/m2. The average asking price of apartments in new developments, for instance, is over 10% higher than the transaction prices, which also indicates that there is room for price increase. As the prices in the secondary market have also moved in the same direction as the prices of new apartments, the price increase during the year shall probably stay on that scale.
The number of transactions will remain stable in comparison to last year – during the year, approximately the same number of apartments in new developments will be completed as last year (about 3,300–3,400), and as the market of new developments has been the primary indicator of market activity in the past five-six years, we mainly base our predictions on that market. In January, about 300 apartments in new developments entered the market. The largest number of apartments was brought to the market by Endover with homes for 132 households created in the 1st stage of their development called Rocca Towers.
Apartment market in Tartu
In Tartu, like in Tallinn, the transaction activity in January was slightly lower than in the past few years – 111 sales-purchase transactions were concluded in the first month of the year, which was 20 transactions less than the figures in 2017 to 2019. Regardless of the drop in the number of transactions, the median price figure of the transactions was the second-best of all time, crossing the threshold of 1,500 €/m2, similarly to August 2019. A large part in that belonged to new developments with a share of 23%, where several transactions with price of 3,000 €/m2 and more were concluded.
Under the statistical surface, however, the market was very active. The key phrase in January was new developments the large volume of which reflects an active market of building permits – in 2019, building permits were issued for about 840 apartments and terraced house apartments. The corresponding number in 2018 was about 600. In addition to large developments (Raadimõisa Kodu next to Tartu, Mõisavahe Kodu in Annelinn), micro apartment developments in Lai Street and Staadioni Street have enlivened the market. Thereby, the threshold of 4,000 €/m2 in asking price was crossed for the first time in the latter of the developments. The activity has also been confirmed by brokers according to whom there were many potential buyers and appraisals. For instance, even the usually calm market of private houses where as a rule interest rather increases in spring was active.
Apartment market in Pärnu
In January 2020, 82 purchase and sales transactions were concluded in Pärnu, with a median price of €1,013/m2. By number of transactions, it was the most active January of the past years where a large contribution came from mainly small apartments – apartments of up to 55 m2 formed over two thirds of the total number of transactions (last year the percentage was only 57). Even though 17 transactions (i.e. 21%) were concluded with new developments, the median price dropped due to a large share of cheaper transactions in comparison to last January (1,125 €/m2) and January 2018 (1,013 €/m2). As the number of apartments authorised by building permits increased to over 350 in Pärnu in 2019 (in 2018 the relevant volume was 200 apartments), similarly to this January, a year with rather similar activity as the last one is to be expected.
Apartment market in Narva
2020 began in Narva with the best result of the past few years in regard to the number of transactions. 63 transactions were concluded in the first month of the year, i.e. in average 9 transactions more than in the past three Januaries. The median price of transactions was rather at the average level of the past years, i.e. 418 €/m2 (about 70–80 €/m2 higher than the level of the past years).
Author – Igor Habal, Uus Maa Real Estate Agency analyst