Falling permits contrast with improving housing market

Estonia’s property sector remains subdued by construction statistics, although experts say the housing market is improving, ERR reports.

Use permits were issued in the third quarter for 124,000 square metres of residential space, below last year’s quarterly average of nearly 145,000 square metres. In the first quarter, construction permits covered 136,000 square metres, compared with an average of nearly 150,000 square metres per quarter last year.

Luminor chief economist Lenno Uusküla said the figures had improved compared with earlier quarters this year, but still showed a decline against previous years. He said construction volumes could be somewhat higher under ideal conditions.

Property expert Tõnu Toompark said the decline in permits did not reflect current market conditions, as more than the usual number were issued last year. He described the housing market as being in a growth phase, with a wide choice for buyers. Sales remain slower than market participants expect, he said, but have improved quarter by quarter. Resale prices have risen for 18 to 24 months, while transaction prices for new apartments have also begun to edge up.

The first phase of the Hipodroomi residential development in Tallinn is complete, representing a tenth of the planned project. Reterra CEO Reigo Randmets said the company had sold more than 100 apartments in Tallinn and Harju County this year, more than during the same period last year. More than 300 prospective buyers attended a customer event at Hipodroomi, he said.

Toompark said homes were becoming more affordable because prices were rising more slowly than average wages.