Retail prices up by 11 pct!

According to Statistics Estonia, in the 1st quarter of 2020, the Dwelling Price Index increased by 11.5% compared to the 1st quarter of 2019. The last time that the change in the index was more significant was in the 3rd quarter of 2014, when it was 13.2%.

According to Egne Säinast, analyst at Statistics Estonia, the prices of apartments increased by 11.3% and the prices of houses by 11.7% compared to the 1st quarter of 2019. “The prices of apartments in Tallinn increased the most – by 12.1%. Prices increased by 8.9% in areas bordering Tallinn with Tartu and Pärnu cities and by 12% in the rest of Estonia,” added Säinast.

The Dwelling Price Index expresses the changes in the square metre prices of transactions made by households for the purchase of dwellings and it is compiled for apartments and houses (detached, semi-detached and terraced houses).

Source: Statistics Estonia

The construction volume increased in 1stQ

According to Statistics Estonia, in the first quarter of 2020, the total production of Estonian construction enterprises in Estonia and abroad increased by 7% year on year. The construction volume increased in Estonia, but decreased in foreign countries.

The production value of Estonian construction enterprises amounted to 631 million euros, of which building construction accounted for 487 million euros and civil engineering for 144 million euros. Compared to the first quarter of 2019, the volume of building construction increased by 5% and the volume of civil engineering works (roads, bridges, port facilities, pipelines, communication and electricity lines, sports fields, etc.) increased by nearly a fifth.

According to Merike Sinisaar, leading analyst at Statistics Estonia, changes in the construction sector happen with some delay. The data of the first quarter show that, because the impact of the emergency situation is not yet evident. “The domestic construction market was affected the most by an increase in the volume of building construction due to repair and reconstruction works. Civil engineering works also contributed to bigger construction volumes,” said Sinisaar.

The construction volume of Estonian construction enterprises in foreign countries decreased by nearly a fifth year on year. There was a fall in both building construction and civil engineering works. Construction in foreign countries accounted for 7% of the total construction volume; the share a year ago was 9%.

According to the Register of Construction Works, 1,874 dwellings were completed, which is an increase of nearly a tenth compared to the same period a year ago. The majority of completed dwellings were in Tallinn, the rural municipalities in the vicinity of Tallinn and in Tartu county. Building permits were granted for the construction of 2,021 dwellings, which is up by a fourth compared to the first quarter of 2019. The most popular type of building was a block of flats.

Completed non-residential buildings numbered 366, with a useful floor area of 277,000 m2 – these were primarily new industrial, office and education premises. Compared to the same quarter of 2019, both the useful floor area as well as the volume of completed non-residential buildings increased.

Read more from Statistics Estonia

Construction volume stayed at the level of the previous year

According to the preliminary data of Statistics Estonia, in 2019, the total production of Estonian construction enterprises in Estonia and in foreign countries amounted to 3.2 billion euros, which is 3% more than in 2018. Taking into account only Estonian construction market, construction volume stayed at the level of the previous year.

The production value of building construction in Estonia and in foreign countries was 2.2 billion euros and the production of civil engineering works totalled 1.0 billion euros. Compared to 2018, the volume of building construction increased by 8% and the volume of civil engineering decreased by 6%.

The domestic construction market was affected the most by a decrease in the construction volume of civil engineering works. The construction of buildings, however, remained on the plus side due to the successful last quarter of 2019. The construction volume of Estonian construction enterprises in foreign countries increased by more than 50% compared to 2018 mainly on account of bigger volume of building construction. Construction in foreign countries accounted for 8% of the total volume of construction in 2019, compared to 6% the year before.

New dwelling construction has been on a growth trend since 2012. According to the data of the Register of Construction Works, in 2019, the number of dwelling completions was 7,014, which is 542 dwellings more than the year before. As in previous years, the majority of completed dwellings were situated in Tallinn, followed by the rural municipalities in the vicinity of Tallinn, and in Tartu county. The majority of completed dwellings had two or four rooms. The floor area of completed dwellings was 94 square metres on average.

In 2019, building permits were granted for the construction of 8,025 dwellings. The most popular type of residential building was a block of flats. The number of completed non-residential buildings was 1,410, with a useful floor area of 0.7 billion square metres – these were primarily new industrial, storage and trade premises. Compared to 2018, the useful floor area as well as the cubic capacity of completed non‑residential buildings decreased.

In the 4th quarter of 2019, the production value of construction amounted to 877 million euros, which is 9% more than in the 4th quarter of 2018. The volume of building construction increased by a fifth and the volume of civil engineering decreased by 8%.

Source: Statistics Estonia

See graph here

Rise of the construction price index was driven by wage pressure and higher prices of materials

According to Statistics Estonia, in 2019, the construction price index increased by 1.9% compared to the average of 2018. In the 4th quarter of 2019, compared to the 3rd quarter, the construction price index changed by 0.5%, and compared to the 4th quarter of 2018, by 1.7%.

Rise of the construction price index was driven by wage pressure and higher prices of materials

In 2019, compared to the 2018 average, the cost of labour increased by 4.3%, use of machinery by 2.0% and building materials by 0.7%. In the 4th quarter of 2019, compared to the 3rd quarter, the index was mainly affected by an increase in the costs of materials, which accounted for 44% of the change. In the 4th quarter, the increase in labour costs accounted for half of the year-on-year rise of the index.

The repair and reconstruction work price index rose by 2.2% in 2019 compared to the average of 2018, including a 4.4% increase in the costs of labour, 5.3% increase in the use of machinery and 0.4% increase in the prices of materials. The index change in the 4th quarter of 2019 was 0.5% compared to the 3rd quarter, and 1.9% compared to the 4th quarter of 2018.

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 construction expenditures taking into consideration the price changes of three basic inputs: labour force, building materials and building machines.

Read more from Statistics Estonia

Moderate rise in the construction price

According to Statistics Estonia, the change of the construction price index in the 2nd quarter of 2019 was 0.3% compared to the 1st quarter of 2019, and 2.0% compared to the 2nd quarter of 2018.

In the 2nd quarter of 2019, compared to the same quarter of the previous year, the construction price index was primarily affected by an increase in the cost of labour, which accounted for 62% of the total increase of the index.

Compared to the previous quarter, labour costs increased by 0.6% and costs of building materials by 0.1%. The prices of building machines increased by 0.4 %.

In the 2nd quarter of 2019, the change of the repair and reconstruction work price index was 0.4% compared to the 1st quarter of 2019, and 2.3% compared to the 2nd quarter of 2018.

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.

Read more from Statistics Estonia

Construction growth slowed down

According to Statistics Estonia, in the 1st quarter of 2019, the total production of Estonian construction enterprises in Estonia and foreign countries increased by 2% compared to the 1st quarter of 2018. Construction volume increased due to the work done in foreign countries. On the Estonian construction market, construction volume decreased.

In the 1st quarter of 2019, the production value of construction enterprises amounted to 581 million euros, of which the production value of building construction was 459 million euros and the production value of civil engineering was 122 million euros. Compared to the 1st quarter of 2018, the volume of building construction increased by 2% and the volume of civil engineering by 3%.

The construction volume of Estonian construction enterprises in foreign countries nearly doubled compared to the 1st quarter of 2018, mainly on account of an increased volume of building construction. The growth was supported also by civil engineering. Construction volume in foreign countries accounted for 9% of the total volume of construction in the 1st quarter of 2019; the share in the same period a year ago was 5%.

On the domestic construction market, the construction volume decreased by 2%. Compared to the same period of the previous year, construction volume decreased in new building construction as well as in repair and reconstruction work. Civil engineering stayed at the level of the previous year.

According to the Register of Construction Works, the number of dwelling completions in the 1st quarter of 2019 was 1,770, which is 232 dwellings more than in the same period a year ago. The majority of completed dwellings were situated in Tallinn, followed by the rural municipalities in the vicinity of Tallinn, and in Tartu county.

In the 1st quarter of 2019, building permits were granted for the construction of 1,585 dwellings, which is 4% more than in the 1st quarter of 2018. The most popular type of building was a block of flats.

The number of completed non-residential buildings was 280, with a useful floor area of 139,600 m2 – these were primarily new agricultural and industrial premises. Compared to the 1st quarter of 2018, both the useful floor area as well as the volume of completed non‑residential buildings decreased.

Read more from Statistics Estonia

11 pct of dwellings were built this century

According to Statistics Estonia, on 1 January 2018, there were 718,600 dwellings in Estonia, of which nearly 76%, or 542,500, were occupied. Of these, 99.1% were conventional dwellings and other housing units, and 0.9% were collective living quarters.

Half of the occupied dwellings that are not collective quarters were smaller than 60 m2, a quarter of the dwellings had a floor area of 60–80 m2 and the rest were over 80 m2. Almost two-thirds of the dwellings consisted of 2 and 3 rooms – 32% and 31%, respectively.

Of all occupied dwellings, 66% had all four amenities: tap water, flush toilet, bath or shower and central heating. 83% of occupied dwellings had tap water, 86% had a bath or shower, 69% had central heating and 87% had a flush toilet.

Of the existing dwellings, 11%, or 78,000, were located in buildings constructed since 2001. The share of new dwellings is above the Estonian average in Harju and Tartu counties.

Read more from Statistics Estonia

Construction volume increased 21 pct in Estonia

According to the preliminary data of Statistics Estonia, in 2018, the total production of Estonian construction enterprises in Estonia and in foreign countries amounted to three billion euros, which was 18% more than in 2017. Taking into account only Estonian construction market, construction volume increased 21%.

Construction volume increased for the third consecutive year. Also the level of 2007, which was so far the best year for the construction market, was exceeded last year. The production value of building construction was two billion euros and the production of civil engineering works totalled one billion euros. Compared to 2017, the volume of building construction increased 18% and the volume of civil engineering nearly a fifth.

Building construction contributed the most to the growth of the domestic construction market. Compared to 2017, construction volume increased in new building construction as well as in repair and reconstruction work. The growth was supported also by civil engineering.

The construction volume of Estonian construction enterprises in foreign countries decreased 13% compared to 2017, mainly on account of smaller volume of building construction. Construction volumes in foreign countries accounted for 6% of the total volume of construction in 2018.

New dwelling construction continued its growth trend for the seventh year. According to the data of the Register of Construction Works, in 2018, the number of dwelling completions was 6,472, which is 582 dwellings more than the year before. As in previous years, the majority of completed dwellings were situated in Tallinn, followed by the rural municipalities in the vicinity of Tallinn, and in Tartu county. The majority of completed dwellings had two or four rooms. The floor area of completed dwellings was 90 square metres on average.

Although the number of building permits issued for the construction of dwellings began to decrease in 2018, there is still demand for new high-quality dwellings in a good location. In 2018, building permits were granted for the construction of 6,990 dwellings, which is a tenth less than in 2017. The most popular type of residential building was a block of flats.

In 2018, the number of completed non-residential buildings was 1,000, with a useful floor area of 1.1 billion square metres – these were primarily new industrial and trade premises and offices. Compared to 2017, the useful floor area as well as the cubic capacity of completed non-residential buildings increased.

In the 4th quarter of 2018, the production value of construction amounted to 782 million euros, which was 13% more than in the 4th quarter of 2017. The volumes of building construction as well as civil engineering increased.

Read more from Statistics Estonia

Construction price index growth accelerated

According to Statistics Estonia, in 2018, the construction price index increased by 1.7% compared to the average of 2017. In the 4th quarter of 2018, compared to the 3rd quarter, the change of the construction price index was 0.8%, and compared to the 4th quarter of 2017, it was 1.7%.

Compared to the 2017 average, the cost of labour increased by 4.0%, use of machinery by 2.6% and materials by 0.4%.

In the 4th quarter of 2018, compared to the 3rd quarter, the change of the construction price index was 0.8%, and compared to the 4th quarter of 2017, it was 1.7%. Compared to the 3rd quarter of 2018, the index was mainly affected by an increase in labour costs, which accounted for 75% of the change on previous quarter. Compared to the 4th quarter of 2017, the increase in labour costs accounted for more than three quarters of the rise of the index.

The repair and reconstruction work price index rose by 1.8% in 2018 compared to the average of 2017, including a 3.7% increase in labour costs, 3.6% increase in machinery use costs and 0.3% increase in prices of materials.

The change of the repair and reconstruction work price index in the 4th quarter of 2018 was  1.0% compared to the 3rd quarter, and 2.2% compared to the 4th quarter of 2017. 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 construction expenditures taking into consideration the price changes of three basic inputs: labour force, building materials and building machines.

Read more from Statistics Estonia

Airbnb to cooperate with tax authority

Online accommodation and hospitality marketplace Airbnb is to share user data with the Estonian Tax and Customs Board (MTA), according to the Baltic News Service (BNS).

An MTA spokesperson confirmed to the BNS that the cooperation is underway and that further details will be made public on Wednesday, at a press conference to be attended by MTA deputy director Rvio Reitmann and Airbnb head of public policy, Patrick Robinson.

The Estonian Association of Hotels and Restaurants (EHRL) had previously stated that Airbnb represents unfair competition and encourages a hidden economy in the sector. It demands that Airbnb income be taxed as is the case in neighbouring Finland.

The EHRL has also blasted plans for a one-euro-per-person-per-day tourist tax applicable in Tallinn only, as proposed by Tallinn city council chief Mihhail Kõlvart (Centre).

Since 2016, an individual submitting a tax return has been required to confirm receipt/non-receipt of rental income. Such income is subject to tax on a gross basis.

At press time, a quick search on the Airbnb site for accommodation for one adult in central Tallinn on the weekend of 7-9 December yielded over 200 results, ranging in price from €9 to over €100 per night. Searches in Tartu and Pärnu resulted in about 50 and 200 options respectively, in a similar price range.

Source: ERR News