Uus Maa: Market review december 2017

Uus MaaActive December added an impressive final touch to another year of growth in the real estate market. 1942 transactions were made in December, which was more than average across the year, but the median price of the transactions increased to the highest level of all time – 1426 EUR/m2. Compared to November, the median price increased even 13.2%, the number of transactions increased by 35. December has traditionally been one of the most active months of the year but as we remember, the previous record price is from last December. The powerful price increase is naturally based on new developments, and especially the large share of Harju County in the total number of transactions.

In total, all over Estonia, 22,340 sales-purchase transactions of apartment ownerships were concluded in 2017. Compared to year 2016, growth in the number of transactions accelerated, increasing to 7.8%. The increase in the median price compared to previous years slowed down a little, the growth numbers remained at the level predicted by experts at the beginning of the year – at 6.6%.

Market review december 2017 1Information: Land Board

In December, Harju County was the only county where the number of transactions visibly increased. In comparison to November, 173 transactions more were concluded in December, and the share of the county in the total number of transactions was nearly 62%, which is the biggest share of the year. Nearly 82% of the 1203 transactions were concluded in Tallinn. Compared to November, the median price in Harjumaa increased to 6.4%, reaching 1731 EUR/m2.

In other counties, the movements compared to the previous month were less drastic: the biggest decrease in the number of transactions was in Lääne-Viru County (–26), the number of transactions increased only in two counties, next to Harju County also in Hiiumaa where no transactions were conducted in November. By the number of transactions, Harju County was traditionally followed by the counties with larger numbers of inhabitants: Tartu County by 194 transactions, Ida-Viru County by 173 transactions and Pärnu County by 99 transactions. Of large counties, the number of transactions decreased by 15 in Pärnu County, by 14 in Ida-Viru County and by 10 in Tartu County.

Based on the median price, Harju County was followed once again by Tartu County (1260 EUR/m2) and Pärnu County (1078 EUR/m2). In December, the median price increased in seven counties, the changes were mainly seasonal, decreasing or increasing to the usual level. As an exception, a new price record of 1078 EUR/m2 was set in Pärnu County where new developments have clearly activated the market and pushed the prices.

In total, last year both the number of transactions and the median price increased basically in every county, which shows that bigger incomes boosted the demand of real estate, which in turn increased the prices due to low supply. The median price increased by at least 20% in Hiiumaa, Viljandi County, Jõgeva County and Pärnu County, the only counties where the transaction prices dropped were Põlva County and Valga County. The number of transactions for which the population plays a bigger role, decreased most in four counties, most of all in Tartu County (2504→2475). Out of big counties, 1000 transactions more were carried out in Harju County (11,303→12,313), over 250 more in Ida-Viru County (853→889) and over 120 more in Pärnu County (1224→1350). In Harju County, the median price of transactions increased by 8% (1478→1595 EUR/m2), in Tartu County by 6% (1156→1224 EUR/m2), and in Ida-Viru County by 5% (190→199 EUR/m2).

Market review december 2017 2Information: Land Board

In Tallinn, the leader of the Estonian market in December, the median price of transactions increased to the record-breaking 1807 EUR/m2, increasing by 6,9% compared to November. Due to the real right contracts of several new developments, the number of transactions in December was only exceeded by those in March. In total, 985 transactions were concluded in December, and it exceeded November by 134. The continually growing volume of new developments, which also pressurized the prices of the secondary market, grew the market of Tallinn also in the year-based comparison: in 2017, 9764 transactions were concluded (+605 compared to last year), the median price of the transactions was 1668 EUR/m2 (+8,2% compared to last year).

Market review december 2017 3Information: Land Board

Out of the official data, the changed interest in the segment of new developments gives the best explanation to the statistics of real estate buyers, although it also reflects immovable properties in addition to apartment ownerships. Compared to November, the number of real estate objects bought by legal persons increased in December to the record-breaking level since the boom – in total, legal persons concluded 1076 sales transactions, which means that their share increased to 65.9% of the total number of transactions. Year 2017 was the first year when the share of legal persons formed over 50% of the sales – thus, the growth in the volume of new developments was very big, greatly influencing the statistics of buyers.

Market review december 2017 4Information: Land Board

Even more than the general statistics of the city, the change in the number of real right contracts concluded with new developments influenced the statistics of the city districts of Tallinn where the number of transactions is even smaller. In December 2017, the largest number of transactions were concluded in the Centre (224), followed by the other districts with larger populations: Lasnamäe (177), Haabersti (159), Northern Tallinn (132) and Mustamäe (118). Also, close to 100 transactions were concluded in Kristiine district. Compared to November, the number of transactions decreased in three districts, the number of transactions considerably increased in several districts due to the influence of new developments, at least 50 transactions more were concluded in Kristiine, Centre and Haabersti districts.

Market review december 2017 5Information: Land Board

Due to the increased volume of new developments, in December compared to November the median price increased in every district; in three districts the price increased by over 10% – in Pirita, Centre and Kristiine. The median price was over 2000 EUR/m2 in the Centre (2503 EUR/m2) and Kristiine (2077 EUR/m2). From the districts with large numbers of transactions, the median price increased by 4.1% in Lasnamäe, by 5.6% in Mustamäe and by 1.2% in Northern Tallinn.

For the whole year, three city districts where the volume of new developments increased most stood out due to the increased number of transactions: the Centre and Lasnamäe where the number of transactions increased by more than 200, and Mustamäe where the number of transactions increased by 160. However, the number of transactions decreased in four districts: Kristiine, Nõmme, Pirita and Northern Tallinn where the volume of new developments remained the same or decreased. The price of transactions increased in all the city districts – the most energetic growth was observed in Haabersti, Lasnamäe and Kristiine where the prices increased by over 10% compared to the previous year.

Market review december 2017 6Information: Land Board

Differently from Tallinn, the market in Tartu was calm in December, similarly to the general tone of the year. In the Christmas month, 150 transactions were concluded in Tartu with a median price of 1329 EUR/m2. Compared to November, 10 transactions more were concluded in Tartu, the median price dropped by 1.9%. In total, 1685 transactions were concluded in Tartu during the year, the number of transactions decreased a little, the median price increased by 4.8% compared to the previous year (1217→1275 EUR/m2).

Market review december 2017 7Information: Land Board

In December, 66 transactions were concluded in Narva with a median price of 379 EUR/m2. The statistics of December reflected the current situation in the real estate market of Narva rather well – the number of transactions has increased to some extent but due to the large supply, there is no price pressure. In total, 120 transactions more were concluded in Narva last year, the median price decreased by 4.4%.

Market review december 2017 8Information: Land Board

Next to Tallinn, the best results of the year were definitely observed in Pärnu where new developments created excitement and where active interest in new apartments also increased the prices in the secondary market. In December, 73 transactions were concluded in Pärnu, which was five less than in November, but the median price climbed to the highest level after the boom – 1239 EUR/m2. Compared to November, the median price increased to 9.2%. In total, compared to year 2016, 93 transactions more were concluded in Pärnu in 2017, the median price of the transactions increased even by 15%.

Market review december 2017 9Information: Land Board

For the remaining municipalities, the current overview is focused on the annual comparison, which gives a better picture than the ups and downs on a monthly basis. The first ten based on the number of transactions included three municipalities of Harjumaa (Rae, Saue, Viimsi) where a significant part of the transactions were new developments, the remaining municipalities experienced a growth in the number of transactions due to the activity of the secondary market. The only place where the number of transactions did not increase was the city of Haapsalu where the prices had considerably increased; however, in most of the municipalities, the growth in the number of transactions was remarkable – in Kohtla-Järve city (where the total number of annual transactions was larger than in Narva city) and in Viimsi municipality, over 100 transactions more were concluded, for the remaining municipalities, it mostly increased by twenty or so.

With the exception of Kohtla-Järve city and Valga municipality, the median price increased in all the remaining municipalities. The price increase was generally strong; in six municipalities out of ten, the median price increased at least by 10%, only in Saaremaa municipality the price increase was somewhat more modest compared to the others (+5.6%). The largest price increase was observed in Haapsalu (+19.7%), a positive supply in the secondary market strongly increased the prices also in the cities of Rakvere (+13.6%), Viljandi (+10.8%) and Maardu (+10.5%). Such a price increase was rather expected, as in previous years, the price leaders were Tallinn and its surroundings but in 2017, the price increase spread all over Estonia where the real estate market is still active.

Market review december 2017 10Information: Land Board

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