Despite the fact that real estate prices continue to set new records, when comparing the average cost of an apartment in Tallinn per square meter with Estonia's average wages, it turns out that the ratio between the two has remained relatively stable for many years already.
Statistics Estonia data regarding average wages in Estonia illustrates a significant improvement in the improvement in Estonian residents' lives: the average monthly wage last year stood at €1,407, up from just €475 in the first quarter of 2005, for example. At the same time, according to Land Board figures, the cost per square meter of an apartment in Tallinn at the time stood at €797 on average, indicating that one month's average wage could buy nearly 0.6 square meters of real estate in the capital city.
In the years to follow, the average monthly wage continued to increase, reaching €850 in the second quarter of 2008. Real estate prices likewise rose, with the cost of an apartment in Tallinn reaching an average of €1,440 per square meter. In terms of one another, however, the ratio remained more or less stable, dropping only slightly to 59 percent.
Wage increases came to a halt during the economic crisis, and by the third quarter of 2009, average monthly wages had fallen to €752. Tallinn real estate prices had seen a sharp drop as well, reaching €781 per square meter of apartment. This was the cheapest time to buy an apartment in the capital, in relative terms, as one month's wages could buy 96 percent of a full square meter.
In the years to follow, wage figures slowly began to increase again, as did real estate prices. The ratio between average wages and the cost of a square meter of apartment, meanwhile, began to creep downward again: while one month's wages could buy 84 percent of a square meter in the third quarter of 2010, by a year later, the ratio had already fallen to just three quarters.
Following the end of the recession, the average wage and cost per square meter ratio stood at 73 percent in the third quarter of 2013, and has remained relatively stable, varying between 69-75 percent, since. In the fourth quarter of 2013, the ratio stood at 74 percent; a year later, at 69 percent, at 71 percent in 2015, 70 percent in 2016, 69 percent in 2017 and 74 percent in the fourth quarter of 2018.
In the meantime, average monthly wages have continued to increase year after year, from €986 at the end of 2013 to €1,105 just two years later, and up to €1,472 by the fourth quarter of 2019.
Real estate prices in the capital city saw a similar spurt during the same period. At the end of 2013, the cost per square meter of an apartment in Tallinn averaged €1,334, increasing to €1,556 two years later and up to €2,085 by the fourth quarter of 2019. By the end of 2019, the average monthly wage, €1,472, could purchase on average 0.71 square meters of an apartment in Tallinn.
Thus, during a time when real estate companies regularly report increases in apartment prices in the capital city, wages continue to grow at a similar clip.
Editor: Aili Vahtla