Construction price index is up again

According to Statistics Estonia, the change of the construction price index in the 1st quarter of 2017 was 0.4% compared to the 4th quarter of 2016, and 0.7% compared to the 1st quarter of 2016.

In the 1st quarter of 2017, compared to the same quarter of the previous year, the construction price index was primarily affected by an increase in the costs of building materials and labour, which accounted for more than 60% and over a third of the total increase of the index, respectively.

Compared to the previous quarter, costs of building materials increased by 0.4%, costs of building machines increased by 0.5% and labour costs increased by 0.5%.

In the 1st quarter of 2017, the change of the repair and reconstruction work price index was 0.4% compared to the 4th quarter of 2016 and 0.5% compared to the 1st quarter of 2016.

The calculation of the construction price index covers four groups of buildings: detached houses, blocks of flats, industrial buildings and office buildings. The repair and reconstruction work price index covers office buildings. The construction price index expresses the change in the expenditures on construction taking into consideration the price changes of three basic inputs: labour force, building materials and building machines.

Change in the construction price index, 1st quarter 2017
4th quarter 2016 – 1st quarter 2017, % 1st quarter 2016 – 1st quarter 2017, %
TOTAL 0.4 0.7
labour force 0.5 0.7
building machines 0.5 0.3
building materials 0.4 0.7
Index of detached houses 0.3 0.5
Index of blocks of flats -0.1 0.6
Index of industrial buildings 0.5 0.3
Index of office buildings 0.6 0.9

 

Change in the repair and reconstruction work price index, 1st quarter 2017
4th quarter 2016 – 1st quarter 2017, % 1st quarter 2016 – 1st quarter 2017, %
TOTAL 0.4 0.5
labour force 0.1 0.4
building machines 1.0 1.9
building materials 0.4 0.4

For the statistical activity “Construction price index”, the main representative of public interest is the Ministry of Economic Affairs and Communications, commissioned by whom Statistics Estonia collects and analyses the data necessary for conducting this statistical activity.

Source: Statistics Estonia

The prices of Estonian apartments increased by 4.5 pct in 2016

According to Statistics Estonia, the Dwelling Price Index increased by 4.7% in 2016 compared to the average of 2015. In the annual comparison, the prices of apartments increased by 4.5% and the prices of houses by 5.4%.

The annual change of the Dwelling Price Index was 8.5% in 2011, 7.3% in 2012, 10.7% in 2013, 13.7% in 2014 and 6.9% in 2015.

The prices of apartments increased in 2016 compared to average of 2015 in all three areas under observation: by 3.4% in Tallinn, by 5.4% in areas bordering Tallinn with Tartu and Pärnu cities and by 8.6% in the rest of Estonia.Dwelling Price Index, change over previous year, 2006–2016

In the 4th quarter of 2016 compared to the 3rd quarter, the Dwelling Price Index increased by 1.2% and compared to the 4th quarter of 2015 by 7.7%.

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 (including detached, semi-detached and terraced houses).

The Owner-Occupied Housing Price Index increased by 3.5% in 2016 compared to the average of 2015.

In the 4th quarter of 2016, the Owner-Occupied Housing Price Index changed by -0.1% compared to the 3rd quarter and by 8.5% compared to the 4th quarter of 2015.

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. The annual index is calculated as the average of four quarters.

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

Connections between housing prices and housing credit in Estonia

This paper of Bank of Estonia investigates the mutual dependence between housing prices and housing credit in Estonia, a country which experienced rapid debt accumulation during the 2000s and big swings in house prices during that period. We use Bayesian econometric methods on data spanning 2000–2015. The estimations show the interdependence between house prices and housing credit. More importantly, housing credit shocks had a stronger effect on house prices in the period of declining credit turnover. The asymmetry in the linkage between housing credit and house prices highlights important policy implications, in that if central banks increase capital buffers during good times, they can release credit conditions during hard times to alleviate the negative spillover into house prices and the real economy.

Read more here (2/2017 Juan Carlos Cuestas, Merike Kukk. Asymmetries in the interaction between housing prices and housing credit in Estonia)

Estonian construction volumes increased in 2016

According to the preliminary data of Statistics Estonia, in 2016 the total production of Estonian construction enterprises in Estonia and in foreign countries amounted to 2.1 billion euros, which was 3% more than in 2015. The construction volumes increased after two years of decline.

The production value of building construction was 1.4 billion euros and the production of civil engineering works totalled 656 million euros. Compared to 2015, the volume of building construction increased 9% and the volume of civil engineering decreased by a tenth.

The domestic construction market was affected the most by a decrease in civil engineering volumes. There was also a decrease in repair and reconstruction work in building construction. However, new building construction, which had taken an upturn already in 2013, continued its growth trend in 2016 as well.

The construction volume of Estonian construction enterprises in foreign countries increased 3% compared to 2015, affected mainly by the construction of buildings. Construction volumes in foreign countries accounted for 11% of the total volume of construction in 2016.

The number of dwelling completions increased for the fifth year. According to the data of the Register of Construction Works, in 2016, the number of dwelling completions was 4,732, i.e. 763 dwellings more than the year before. The largest share of completed dwellings was in blocks of flats and every second dwelling had two or three rooms. The majority of completed dwellings were situated in Tallinn, followed by the rural municipalities in the vicinity of Tallinn, and in Tartu county.

There is still a demand for new high-quality dwellings in a good location. In 2016, building permits were granted for the construction of 6,021 dwellings, which is about 8% more than in 2015. The most popular type of residential building was a block of flats.

In 2016, the number of completed non-residential buildings was 1,060 with a useful floor area of 771,000 square metres – these were primarily new commercial, storage and industrial premises. Compared to 2015, the useful floor area as well as the cubic capacity of completed non-residential buildings increased.

In the 4th quarter of 2016, the production value of construction amounted to 572 million euros, which was 3% more than in the 4th quarter of 2015. The volumes of building construction as well as civil engineering increased.Construction volume index, 2000–2016

The statistics are based on the questionnaire “Economic activity, quarter”, the submission date of which was 20 January 2017. Statistics Estonia published the quarterly summary in 23 working days. For the statistical activity “Financial statistics of enterprises (quarterly)”, the main representative of public interest is the Ministry of Economic Affairs and Communications, commissioned by whom Statistics Estonia collects and analyses the data necessary for conducting the statistical activity.

Source: Statistics Estonia

Linnahall’s €100m makeover to be completed in 2019

Reconstruction of the long-abandoned Linnahall entertainment arena in Tallinn’s port area is expected to be completed in 2019 at a total cost exceeding 100 million euros.

“During the past six months, we worked toward making sure how to proceed,” said Deputy Mayor Taavi Aas, standing in for the mayor, at a press conference on Tuesday. “I am beginning to hope that the grand house with a grand history will come to life again. We have reached an agreement with the government that we will do it together.”

The entertainment and sports arena known as Linnahall, designed by Estonian architect Raine Karp and boasting a seating capacity of 4,200, was completed in time for the sailing events of the 1980 Moscow Olympics, which were hosted in Tallinn. The four-story building has a total enclosed area of 37,000 square meters.

Read more from ERR News

State interested in developing former Patarei prison in collaboration with private sector

The Estonian state real estate management company RKAS would like to develop the property of the former Patarei Sea Fortress-Prison together with the private sector and estimates that reconstruction and upkeep of the compound could run approximately 150 million euros over 30 years.

The detailed plan being processed for the 3.6-hectare property sandwiched between Kalaranna Street and the Baltic Sea calls for the renovation of the heritage-protected Patarei Sea Fortress and finding contemporary uses for it. The plan also provides for the possibility of erecting residential buildings up to five stories in height next to the fortress building.

Patarei Sea Fortress-Prison, which was completed in 1840, was built on the order of Russian Emperor Nicholas I. Originally intended for use as a sea fortress, the complex was used as a barracks until the collapse of the Russian Empire. From 1920 until 2002, it was used as a prison by various regimes, and the main part of the complex was declared a cultural monument of the Republic of Estonia in May 1997. The complex was closed to the public in October of this year.

Read more from ERR News

Estonian construction volumes increased in Q2

According to Statistics Estonia, in the 2nd quarter of 2016 compared to the same quarter of the previous year, the total production of Estonian construction enterprises in Estonia and foreign countries increased 4%.

In the 2nd quarter of 2016, the production value of construction enterprises amounted to 525 million euros, of which the production value of building construction was 354 million euros and the production value of civil engineering was 171 million euros. Compared to the 2nd quarter of 2015, the volume of building construction increased 16% and the volume of civil engineering decreased 13%.

The domestic construction market was still influenced the most by a fall in civil engineering volumes, while building construction continued to grow. Compared to the same period of the previous year, there was a growth in new building construction as well as in repair and reconstruction work in building construction.

The construction volume of Estonian construction enterprises in foreign countries increased about a third compared to the 2nd quarter of 2015, influenced mainly by the construction of buildings. Construction volumes in foreign countries accounted for 12% of the total volume of construction in the 2nd quarter of 2016.

According to the Register of Construction Works, in the 2nd quarter of 2016, the number of dwelling completions was 1,325, i.e. 598 dwellings more than in the same period a year ago. More than a half of the completed dwellings were situated in blocks of flats. The majority of completed dwellings were situated in Tallinn.

There is still a demand for new high-quality dwellings in a good location. In the 2nd quarter of 2016, building permits were granted for the construction of 1,817 dwellings, which is 6% more than in the 2nd quarter a year ago. The most popular type of building was a block of flats.

The number of completed non-residential buildings was 243 with a useful floor area of 192,000 square metres – this consisted primarily of new accommodation, commercial and storage premises. Compared to the 2nd quarter of 2015, both the useful floor area and the volume of completed non-residential buildings increased.

Diagram: Construction volume index and its trend

Source: Statistics Estonia