Peep Soomann, member of the board of the Estonian real estate firm Pindi Kinnisvara, said that while real estate statistics indicate a sharp price increase, the figures are actually misleading as the seemingly rapid growth is driven by the large share of new apartments on the market.
Statistics released earlier this week suggested the average price per square meter of Tallinn apartments is €2,000.
"Clearly, this is complete nonsense. The price per square meter of apartments bought in October was €2,000 as around one-third of the transactions were made with significantly more expensive new development apartments. The real increase in apartment prices amounts to a few percent per year," Sooman said in a press release.
The chairman of Pindi Kinnisvara management board said that statistics are a powerful force and, having acquainted themselves with the figures available, owners of modest assets, too, will seek to receive €2,000 per square meter for their apartment as they have miscalculated the price.
Sooman recommends to calculate the price of one's apartment based on actual comparable transactions, not the real estate offers next door or the general average, which can fluctuate sharply depending on the economic cycle.
"During the economic downturn, the price per square meter in an average Tallinn apartment wasn't €700, either, it was simply that the number of transactions involving cheaper assets that were in poor shape was higher, which drove the average price down," he said.
A total of 1,446 apartment sales and purchase transactions were made in Estonia's cities in October, a number which was last topped a year ago. The average transaction price of apartments in Estonia's 17 largest cities and towns rose 7 percent in October, reaching near-record levels at €1,545 per square meter.
Editor: Helen Wright