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Description of real property price indices

The price index of real property has been compiled from the price indices of apartment ownership, of residential land with buildings and of land without buildings the objective being to describe the price dynamics of real estate market more comprehensively. The included market sectors - land without buildings, residential apartments and land with residential buildings - make in total approximately 85-90% of the Estonian real estate market. In index calculations the following fixed weights have been set to initial indices, which more or less correspond to the relative importance of the sectors in the market:

  • apartment ownership - 55%
  • land without buildings - 30%
  • residential land with buildings - 15%
The price index of apartment ownership is based on hedonic regression and it describes the market price dynamics of apartments that are used as dwelling in the Estonian market. The index model includes purchase and sales contracts of residential apartments from 17 Estonian towns (all county centres and Kohtla-Järve and Narva), which constitute in total about 75% of all transactions with apartments in Estonia. In addition to the location of the apartment, also the size of the apartment has been considered in the model.

The price index of land without buildings is based on hedonic regression of all transactions with immovables without buildings, which meet the terms of free market. To intended uses and parcels of profit-yielding land the following fixed percentages have been set corresponding approximately to the average distribution of transactions with land without buildings:
  • residential land - 30%
  • profit-yielding land, arable land - 10%
  • profit-yielding land, forest land - 30%
  • profit-yielding land, other/several parcels - 20%
  • other/several land use types - 10%
The price index of residential land with buildings is based on the regression of recurring sales. The index describes the changes in transaction values between recurring sales of residential properties with buildings. Further to the removal of transactions of non-free market, which was done also in case of all other indices, from the analysis of recurring sales also transactions performed at a very low price or with a very short time interval have been removed. Also transaction pairs with a very big price change have been removed or set  to a lower weight, because in this case these are probably not free market transactions or the change in price has been caused by something other than market forces (e.g by a change on the property).






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  Mustamäe tee 51, 10621 Tallinn, phone: +372 665 0600, fax: +372 665 0604, e-mail: maaamet@maaamet.ee