October in the real estate market was a mirror image of September. The same tendencies continued as in September – the negative impacts of the economy mostly in the form of increased unemployment have not reached the real estate market yet, whereas the high transaction activity of buyers is a sign of much lower concern about the corona epidemic in comparison to spring.
The picture may be shaken by additional restrictions, which are not as extensive as in March and April but still deteriorate the economic situation. We should be cautious of the struggling following the quick recovery, which for a certain sector may mean a much longer recovery period.
Due to a lower volume of offering of new developments, the next 12 months will be a little less active when considering the number of transactions, but the extent of the impact on price is still unknown. In several segments like the market of typical apartments in Tallinn, Pärnu and Narva, the prices have dropped but in most of the areas no price drop has occurred.
Apartment market in Estonia
In October, mainly due to the large sales volume of the transactions with new developments in the market of Tallinn, over 2,100 transactions were concluded for the second consecutive month (2,190 transactions in total), which was the best result of this year, surpassing the result of September by nearly 25 transactions.
The transaction activity is constantly high also in the rest of Estonia – the best results of the year were achieved in Harju County, Pärnu County, Rapla County, Saaremaa and Valga County. The median price of transactions was 1,490 €/m2, which means that based on the first ten months of the year the number of transactions has dropped by 9% but the median price has increased by 5%.
In Harju County, the median price was 1,946 €/m2 (over 1,900 €/m2 for the third consecutive month), in comparison to one year ago, the median price has increased by nearly 8% this year. In comparison to the first ten months of last year, the median price has dropped in four counties, which has rather been based on the structure of transactions than on a substantial price drop.
In Tartu County, the median price has increased by 9.3% (1,495 €/m2) and in Ida-Viru County by 5.2% (203 €/m2).
Apartment market in Tallinn
Due to the combination of a large volume of earlier transactions with new developments and the high activity of the secondary market, October was the most active month of the year in Tallinn. 933 transactions were concluded in October, which was a very strong result, as since 2017 the line of 900 transactions has only been crossed in 7 months.
624 transactions were concluded in the secondary market (628 transactions in September); however, over 300 transactions were concluded with new developments, which means that the share was 33%. The high share of new developments was reflected in the median price, also raising the figure to the highest level of this year (2,097 €/m2), losing only to last December.
In the first ten months of the year, the median price has increased by 8%, but in comparison to the beginning of the year, we cannot speak of a stable price increase. The picture is significantly more varied – in some new developments, the prices have dropped through lower prices of storage rooms and parking places; in the area of typical apartments, i.e. the “hills”, we have seen an average price correction of 5%, whereas the prices have not dropped at all in other areas.
As a rule, prices have melted in the areas where the buyers are the people who have suffered most from the crisis, i.e. people with average and below-average income.
Apartment market in Tartu
Due to an active market of new developments, over 190 transactions were concluded in Tartu for the third consecutive month. In October, the share of new developments was even 39% (77 transactions), whereas the secondary market has calmed down, which is characteristic of the end of the year.
The activity of the market of new developments is also reflected by the fact that in the first 10 months of last year, 25% of transactions were concluded with new buildings, whereas this year the share was 31%. Due to the structure of transactions, the median price in October was even 1,587 €/m2 and unlike in Tallinn, Pärnu and Narva, the price level in Tartu have increased in comparison to the beginning of the year, both in the market of new developments and in the secondary market.
For instance, based on the first nine months of the year, the price level of the secondary market increased by 4% (1324→1383 €/m2), in the market of new developments, however, by 10% (1782→1969 €/m2). In Annelinn, the median price of the apartments in the secondary market increased by 7%, based on the first 10 months, the relevant figure in the largest district of Tartu was 1,195 €/m2.
Apartment market in Pärnu
In Pärnu, the best result of this year was achieved in October – 87 transactions, which regardless of the high figure was influenced by the secondary market. Only 12 transactions were concluded with new developments, whereas in the context of the past two years, the result of the secondary market (75 transactions) was only inferior to last May.
The median price in October was 1,327 €/m2, which in the context of this year was only inferior to that of March and May, whereas for the last two months the share of new developments was at least 30%. If the prices in the market of new developments have increased by over 10% in comparison to last year, in the secondary market (especially for typical apartments) we are witnessing a price drop like in Tallinn.
In addition to the wealthier inhabitants of Pärnu, the market of new developments has been also supported by buyers from outside Pärnu. However, the buyers in the secondary market are mainly local people with medium or less than medium income who have suffered most in the context of this year. This, however, means that the price difference between older and newer apartments will increase.
Apartment market in Narva
52 transactions were concluded in Narva, which is a step back in comparison to September but still rather close to the average result of the past few years. Based on the first ten months of the year, the median price of transactions has increased by 3% in comparison to last year, but in comparison to the beginning of the year, a price correction has taken place like in Tallinn and Pärnu.
In the first quarter, the median price of transactions was 410 €/m2, in the second quarter 395 €/m2 and in the third quarter 381 €/m2. Thus, transactions are taking place but due to the uncertainty and lower demand they are concluded at a somewhat lower level.