The Dwelling Price Index most influenced by apartments in Tallinn

According to Statistics Estonia, in the 1st quarter of 2017, the Dwelling Price Index changed by -0.1% compared to the 4th quarter of 2016 and by 7.7% compared to the 1st quarter of 2016.

Compared to the previous quarter, the prices of apartments increased by 0.7% and the prices of houses decreased by 2.1%. Compared to the 4th quarter of 2016, the prices of apartments increased by 1.1% in Tallinn and by 3.2% in areas bordering Tallinn with Tartu and Pärnu cities, but decreased by 5.8% in the rest of Estonia.

Compared to the 1st quarter of 2016, the prices of apartments have increased by 6.9% and the prices of houses by 9.9%. Compared to the 1st quarter of the previous year, the prices of apartments increased by 7.9% in Tallinn, by 4.9% in areas bordering Tallinn with Tartu and Pärnu cities, and by 5.6% in the rest of Estonia.

The Dwelling Price Index expresses the changes in the transaction square metre prices of dwellings purchased by households. The Dwelling Price Indices have been compiled for apartments and houses (detached, semi-detached and terraced houses).

In the 1st quarter of 2017, the Owner-Occupied Housing Price Index changed by -2.2% compared to the 4th quarter of 2016 and by 7.4% compared to the 1st quarter of 2016.

The Owner-Occupied Housing Price Index expresses the changes in the prices of the acquisition of dwellings new to the household sector and other goods and services that households purchase in their role as owner-occupiers. The index consists of four parts: the acquisition of dwellings, other services related to the acquisition of dwellings, major repairs and maintenance, and insurance connected with dwellings.

The Owner-Occupied Housing Price Index is published on the base 2010 = 100. The time series starts from the 1st quarter of 2005; major repairs and maintenance are included from the 1st quarter of 2007 and insurance connected with dwellings is included from the 1st quarter of 2012.

For the statistical activity “Dwelling price index and owner-occupied housing price index”, the main representative of public interest is the Ministry of Finance commissioned by whom Statistics Estonia collects and analyses the data necessary for conducting the statistical activity.

Source: Statistics Estonia

Code card identification still popular in Estonia

A recently conducted survey shows that though Estonian residents’ awareness of the need for cyber security is high, up to 40 percent still prefer code cards to other means of identification when logging in to their Internet bank.

The Nutikaitse 2017 project looked into residents’ skills and knowledge of cyber security procedures, and how aware they are of potential threats. One of the project’s advisors, Erki Peegel, told ERR’s radio news that a majority of respondents also applies this knowledge.

More than 90 percent of residents use passwords for their smart devices and don’t share them with others. At the same time, the fact that some 40 percent of respondents still prefer outdated code cards to more up-to-date means of identification when dealing with their bank online is a cause for worry, Peegel said.

Read more from ERR News

More corruption prevention needed in state-owned companies

An analysis by the National Audit Office indicates that a lot of state-owned companies don’t deal with the prevention of corruption systematically. This above all points to deficiencies in the work of their supervisory boards, the office finds.

The analysis revealed that many of state-owned companies have not established the internal guidelines required for the prevention of corruption, and that the assessment of corruption risks and raising employees’ awareness should be given more attention. Most companies have not made it possible for employees to report suspicions of corruption anonymously or determined an action plan that would explain how to behave in such a situation, including informing law enforcement and the general public.

Also, a lot of the companies haven’t established conditions for the giving and receiving of gifts. Still, they predominantly see measures against corruption as necessary, and ministries that manage corporations as well as public works are already applying best practices for the prevention of corruption.

Read more from ERR News

Tallinn airport tram line to enter into service at end of August

Tram service to Lennart Meri Tallinn Airport is expected to begin at the end of August, construction executives said as the completion of the principal structures of the tram tunnel under the railway line at Ülemiste was celebrated on Friday.

 

Construction of the extension of the number 4 tram line to Tallinn Airport began in spring 2016. Once service to the airport is established, some additional work such as road construction work, street lighting and landscaping work will continue through the end of October.

Read more on ERR News site, original source BNS

Estonia’s Russian-speaking residents against NATO presence

While among Estonian-speaking residents, support for the presence of NATO forces in Estonia is high, the majority of the Russian-speaking population is against it, results of a survey commissioned by the Ministry of Defence show.

Results of the survey show that 69 percent of Estonian residents support the presence of NATO forces in the country, and 23 percent are against it. Two years ago the indicators were 68 percent and 25 percent respectively.

While 89 percent of the Estonian-speaking population support the presence of allied forces and only 6 percent are against it, just 27 percent of the Russian-speaking residents support the presence while 57 percent are against it.

Sociologist Juhan Kivirähk of pollster Turu-uuringute AS that carried out the survey said that this attitude could also be seen looking at attitudes towards Estonia’s being a member of NATO.

The survey was carried out in March. 1,202 Estonian residents were interviewed. Since January 2000 and including this latest one, no fewer than 41 surveys have been conducted to sound out attitudes towards the alliance.

Source: BNS via ERR News

Housing loan portfolio up 6 pct year-on-year in April

  • Corporate and household loan and lease portfolio grew strongly in April, up almost 7% year-on-year
  • Issuance of new long-term loans to companies remained unchanged from April 2016
  • New housing loans have seen an increase relative to a year ago
  • Deposits with banks continued to grow faster than the loan and lease portfolio

Corporate and household loan and lease portfolio continued to grow solidly in April, increasing 6.6% year-on-year. The loan and lease stock grew by approximately 73 million euros, amounting to around 17.4 bn euros as of the end of the month.

The corporate loan and lease stock grew 7% year-on-year. Growth has been stable this year at a level close to last year’s average. Short-term loans have picked up over the past few months. Growth has been fastest for loans to the primary sector and trade companies. New long-term loans were issued to companies in the value of 228 million euros, a level more or less unchanged from April 2016.

Housing loan portfolio was up 6% year-on-year in April. Housing loans have been gathering pace since the second half of 2016. The housing and loan market activity has been intensified by an increase in transactions with new apartments. The volume of housing loans issued in the year to April has grown, relative to last year’s figure. There has been an increase in the number of contracts as well as the average amount of a loan.

Household car leasing continued to grow at a fast pace, up 14% year-on-year. The stock of overdraft and credit card loans started to increase in the second half of 2016 and gained slightly over 3% in March and April compared to a year earlier.

The average interest rate for new housing loans has risen slightly, resuming the mid-2016 level. The average interest rate of housing loans issued in April was 2.3%. The interest rate of corporate long-term loans was, on average, considerably high in April relative to the past months, affected by the refinancing of loans restructured to avoid default.

The volume of loans overdue over 60 days remained low in April. The volume of loans overdue over 60 days was 163 million euros, accounting for 1.1% of the loan portfolio. 97% of such loans are covered by loan-loss provisions.

Corporate and household deposits continue to outpace the loan and lease portfolio. Corporate and household deposits were up 11% year-on-year in April, amounting to almost 12 bn euros as of the end of the month. Annual growth in corporate deposits accelerated to 15%. Similar to previous months, household deposits gained approximately 8% on a year earlier.

Source: Bank of Estonia

Author: Mari Tamm, Economist at Eesti Pank

Wages and productivity are better aligned

  • Economic activity picked up and productivity growth increased at the same time that wage growth slowed
  • The fastest wage growth in the industrial sector was in construction and oil shale
  • Wage growth is slower in the service sector than in previous years
  • The purchasing power of those earning the average wage will increase more slowly because of inflation

The average gross monthly wage was 5.7% higher in the first quarter of 2017 than it was a year earlier. This was lower than the growth rate of 6.9% in the previous quarter. Growth in the productivity and wages of workers became better aligned, as economic activity picked up and productivity growth increased at the same time that wage growth slowed. This is shown both by data for exports and industrial output and by sentiment indicators.

Wage growth slowed in the service sector, but it did not change in the industrial sector. Within that sector, wage growth accelerated in construction and recovered strongly in the oil shale sector through mining and energy. A rebound in demand led construction to hire more workers and raise wages. Output increased by 20% in construction in the first quarter, with growth in the construction of buildings and in investment in infrastructure. Wage growth slowed in manufacturing however, though the number of workers in manufacturing also increased and the economic circumstances of the sector improved as growth in external demand increased.

Strong growth in private consumption and wage rises in the public sector have caused wages in the service sector to rise faster in recent years than the average for the economy, but this growth has now slowed a little. The growth did not slow in all parts of the service sector though, with wage growth increasing for example in retail and in information and communications. One-off factors played a role in this, such as the wage agreement in the health sector and smaller bonuses in the financial sector than in the previous year.

As consumer prices rise faster, the purchasing power of those earning wages will again increase markedly slower than nominal wages. Inflation stood at 3% in the first quarter, and so real wage growth was 2.6%. Looking back over a longer period, the purchasing power of the average wage has increased by 20% from before the crisis in 2008, and by some 30% since 2010, when the recession was at its deepest.

Source: Bank of Estonia

Author: Orsolya Soosaar, Economist at Eesti Pank