Market Review July 2019

In the 1st half-year of 2019, 11,131 sales-purchase transactions of apartment ownerships were concluded in Estonia. The number of transactions remained at more or less same level as in the three previous six-month periods. In comparison to the 1st half-year of last year, 158 transactions more were concluded. The median price of transactions is still increasing, it was 1,360 EUR/m2 in the 1st half-year, i.e. less than 1% more than during the same period last year.

55% of apartment transactions were concluded in Harju County, and as usual, the median price of transactions was the highest namely there (1,743 EUR/m2, i.e. 128% higher than the median price in all Estonia). In comparison to the first six months of last year, 129 transactions less were concluded in Harju County. However, the median price increased by 4.2%. The lower number of transactions was caused by a long-term reduction in the offering of apartments in new developments. However, the quicker growth in asking prices will fuel the price increase also in the nearest future. Next to Harju County, the largest number of transactions were concluded in  Tartu County (1,270 transactions, +1 in comparison to the same period last year) and in Ida-Viru County (1,161 transactions in comparison to the same period last year). In addition to Harju County, the median price of transactions exceeded the line of 1,000 EUR/m2 also in Tartu County (1,344 EUR/m2) and Pärnu County (1,041 EUR/m2). In comparison to the same period last year, the number of transactions increased in 7 counties and the median price in 14 counties, decreasing only in Ida-Viru County.

The market of private houses moved upward as well – in the first six months of the year, 1,274 transactions were concluded, the total value of transactions was 145 million euros and the average price nearly 114,000 euros. In comparison to the same period last year, 81 transactions more were concluded, the average price of transactions increased by about 8000 euros. Similarly to the apartment market, the growth was extensive – the average price of transactions decreased in five counties, the number of transactions only in three counties. At the county level, the market of private houses resembles the market of apartment buildings where the same counties lead both by the value of property and the transactions, although the price differences are smaller in comparison to the apartment market. The largest number of transactions was concluded in Harju County (362), followed by Pärnu County (141) and Tartu County (136). The average price was nearly 230,000 euros in Harju County, 136,000 euros in Tartu County, and below 100,000 euros elsewhere.

In the first six months, Tallinn saw a larger drop in the number of transactions: 4,983 transactions were concluded last year, about 300 transactions less this year (i.e. 4,698 transactions). The decrease was mainly caused by lower sales of new developments due to reduced offering of new developments. The offering has been mainly reduced by a drop in the number of building permits as well as the increase in the building prices; therefore, a smaller number of new developments have been introduced to the market than two years ago. As the building volumes of this year should be similar to that of last year, the number of transactions should still not see any significant changes. The median price of transactions, however, has increased both due to a quicker growth in the asking prices of new developments and the secondary market – in the first six months of 2019, the median price of transactions was 1,847 EUR/m2, i.e. 5.7% higher than last year.

The number of transactions dropped also in Tartu but was statistically insignificant (931 transactions last year, 900 transactions this year). Similarly to Tallinn, the number of transactions decreased by over 4%. Considering the low baseline of last year, the expected increase in the number of transactions took place in Pärnu (397→460). The median price of transactions increased even by 6.7% but falls behind by nearly 200 EUR/m2 compared to Tartu. The number of transactions in Narva also increased (332→379) but the median price of transactions has still not recovered since the economic crisis more than 10 years ago: In the first six months of 2019, the median price of transactions was 376 EUR/m2; last year it was 403 EUR/m2.

The recent figures of county towns have remained stable and in the conditions of decreasing and aging population, any leaps will be caused by developments not apparent to us. From time to time, the market is activated by new developments (like e.g. Tamulakodu in the city of Võru) but on a wider scale, the market is mostly static. The median price of transactions, however, is moving mostly upward – thus, in comparison to the same period last year, in the first six months of 2019, the median price increased more than 50 EUR/m2 in Võru, Haapsalu, Kuressaare, Paide, Põlva and Kärdla. Having experienced a decline, the number of offers is also increasing – a clear sign that even lower-quality real estate may exchange owners for a good price if the demand is high.