The average price per m2 was 706 euros in 2011

According to Statistics Estonia, in 2011, 32,486 purchase-sale transactions of real estate in the total value of 1.5 billion euros were notarised. During the last two years the number of transactions of real estate market has increased. Compared to 2006, the boom year, the number of transactions with registered immovable and the number of dwellings in purchase-sale has decreased by a half.

During the year, the number of transactions increased by 3% compared to 2010 and the total value of transactions increased by a quarter. In 2011, the average value of a purchase-sale transaction was 47,528 euros, which is by one fifth bigger than in 2010. The growth of the average value of a transaction was affected by the increase in the share of more expensive objects and completion of several new developments.

The value of transactions with dwellings accounted for 48% of the total value of purchase-sale transactions. 32% of purchase-sale transactions of real estate were covered with unimproved registered immovable and 19% transactions with registered immovable. Compared to 2010, the average value of a transaction with unimproved registered immovable increased 17% and the average value of a transaction with registered immovable increased 28%. The average value of a transaction with dwelling increased 13%.

Compared to 2010, the average value of a purchase-sale transaction increased the most (32%) in Northern Estonia, where the number of new and more expensive apartments was the largest compared to other regions. In Central Estonia the increase was 14%, in North-eastern Estonia 8% and in Western Estonia 1%.

In 2011 the average price per square metre of a dwelling in purchase-sale transaction was 706 euros, which is by a tenth more than in 2010. The price per square metre in Tallinn increased 13%, in Tartu 8% and in Pärnu 6%.

Trend of the notarised purchase-sale transactions of real estate, 1st quarter 2000 – 4th quarter 2011

Diagram: Trend of the notarised purchase-sale transactions of real estate

Since 2008 the data of the Estonian Land Board serve as a basis for the production of official statistics on the purchase-sale transactions of real estate. In previous years Statistics Estonia collected the data from notaries.

Source: Statistics Estonia

Households borrowing during a creditless recovery

This working paper of the Bank of Estonia investigates the contribution of households to the creditless recovery. „We use Estonian cross-sectional microdata on households’ assets, liabilities, income, expectations and intention to use credit in 2001-2010. „ 

The results indicate that

(1) there was a large-scale drop in households demand for credit during the recession and sluggish recovery after the recession.

(2) One third of the sluggish recovery in credit demand is explained by changed household endowments such as income reduction and lower income expectations, while two thirds is explained by changed behavioural relations such as renters taking mortgages less often and employed individuals using credit less often.

(3) Changed behavioural relations explain a higher proportion of the credit demand drop in longer-term credit such as loans than in shorter-term credit such as credit card purchases.

(4) 44% of households who wanted to use credit were credit constrained during the recovery and households with lower credit worthiness were more likely to apply for credit.

Read more: Bank of Estonia