Uus Maa: Market Review February 2019

Uus MaaVarious indicators like reduced feeling of security of consumers and a prognosis of a slower economic growth are signs of the very good times in the real estate market becoming just good times for real estate in Estonia. February continued at the pace similar to January, which again means that in comparison to the same period last year the number of transactions dropped but the increase in the median price was low.

1,644 sale/purchase contracts of apartment ownerships were concluded all over Estonia, which was 63 less than last February. In the first two months of the year, 2019 was already in minus by 111 apartment transactions. Leaving out the transactions of Harju County, based on the first two months the remaining counties were behind even in comparison to year 2017 (–39). The median price of transactions in February was 1,347 EUR/m2, which was 1.1% more than during the same period last year (1.6% during the first two months).

The drop in the number of transactions has most of all influenced the areas where the market of new developments has been more active, for example in the city of Tallinn, the number of transactions has decreased by 113 in the first two months of the year. In February 2019, 674 sale/purchase contracts were concluded in Tallinn compared to the 771 transactions last year. One cause of the big drop in the number of transactions is also the high baseline; as we know, a larger drop in the number of transactions last year came in the 3rd and 4th quarter. The number of transactions will probably  still not decrease this year, as a few hundred more apartments should be completed compared to last year. Also, the number of apartments having received a building permit is increasing compared to last year – in January and February, 491 apartments in terraced houses and apartment buildings received a building permit, while a year ago the number was only 321. The price increase and a stable strong demand have not allowed the price to drop – the median price of transactions has increased by 5.6% in the first two months of the year. In 2018, the median price of transactions was 1,757 EUR/m2; in 2019 it was 1,856 EUR/m2.

In other larger cities the changes have been less prominent – in Tartu, due to a reduced number of transactions of new developments, a larger drop could be observed in January, while 11 transactions more than last year were concluded in February. The median price of transactions was 5.7% higher than last year. As a whole, 125 purchase and sales transactions were concluded in Tartu, with a median price of 1,420 EUR/m 2 . In the first two months, 13 transactions less than last year were concluded in Tartu, the median price of the transactions is 3.1% lower than last January, which was a more active January than average due to new developments.

In Pärnu, the number of transactions and the median price of transactions was rather similar to last year – 63 transactions were concluded in February 2019, which was 4 transactions more than last year. The median price of the transactions was 1,159 EUR/m 2 , which is virtually as high as last year. In the first two months of the year, the number of transactions in Pärnu has increased by 12 compared to last year. However, as for any comparison, the low baseline of last year should be considered. Namely, over 140 apartment transactions less were concluded in Pärnu city in 2018 compared to year 2017. The median price of transactions in the first two months of 2019 was lower than in 2018 (1,199→1,154 EUR/m 2 ), which was largely influenced by the structure of transactions.

In Narva, based on the number of transactions, the beginning of the year has been more active than last year. If 108 transactions were concluded in the first two months of year 2018, in 2019 the number was 120. However, the differences in numbers are still too small to draw bigger conclusions. The asking price of apartments has remained virtually at the same level for over a year, but the number of offers and the median price of transactions have dropped, which suggests that the number of sellers who believe they are able to sell their real estate for the asking price has dropped in Narva. In the first two months, the median price of transactions has remained under 340 EUR/m2 (424 EUR/m 2 last year). In total, 61 transactions were concluded in Narva in February, with a median price of 347 EUR/m2.

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