Estonia

In Tallinn, the capital of Estonia, the average price of dwellings was up 10.4% on the year ending in Q2 2011, to €1,033 per square metre (sq. m.) (up 4.9% inflation-adjusted), according to the Statistical Office of Estonia.

Nationally the average price of dwellings was up 10.6% to €703 per sq. m. during the year to end-Q2 2011. When adjusted for inflation, Estonian house prices rose by 5.2% over the same period.

It has been a rough ride.  After amazing 37% annual house price rises from 2004 to 2006:
In 2007, the average price of dwellings dropped by 1.5% (-9.7% inflation-adjusted)In 2008, house prices fell 18.3% (-24.5% inflation-adjusted)In 2009, house prices dropped 30.5% (-29.1% inflation-adjusted)
After these 3 horrendous years, the house price recovery began in the second half of 2010, and during 2010 the average price of dwellings was up 4.1% (-1.1% inflation-adjusted).

Yet things seem to be moving. Some say construction of at least 10,000 new residential units in Tallinn could begin before the year ends. There were 2,245 dwelling permits granted in the year to Q3 2011, up 21% on last year, according to the Register of Construction Works.  In Q1 2011, transactions in Estonia rose by 3% from a year earlier, though they were down 29% from the previous quarter. Why the poor quarterly data?  Probably, increasing property prices were slowing buyers’ decision-making processes.

But despite rising house prices, strengthening construction and transactions volumes, the travails of the eurozone could yet spook the market.  Estonia joined the euro this year after many years of effort – only to find the club in disarray.

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