Steven&co - Estonian tales

Once in a while, we are contemplating looking for a larger place to live in. Ideally, that would be a small house, or a large apartment with a bit of a garden (so that the kids can play outside without the need of having to find a nearby park).

Living, however, is expensive here, and it becomes more so every day. I often hear people in Belgium complain about the rising prices of houses, but that seems to be trivial compared to what is going on in Tallinn.

For example. An apartment such as ours (the comparison is easy, as all these places have the same floor plan) is now typically advertised with an asking price of about double what we paid ourselves three years ago. I have to disappoint those who would attribute this to renovation - see for yourself on what you could get for that price (*). If we had the pleasure to welcome you in our place already, you will understand that it would be folly for us to ask for less. In any case, if we decide to sell and move on, I am surely going to invest in some cleaning up and a professional photographer...

All the places we have been prospecting easily cost around 160.000 euro. And that does not buy a lot - some 75 square meters in a reasonably safe and accommodating part of the city. No luxury, no guaranteed green area. I hardly dare to draw comparisons with what a city like Gent has to offer, but I have seen recent adverts where newly built apartments in the city centre were priced at about that amount for at least 100 square meters.

The bank would have no problem helping us out. Considering a mortgage over the course of 30 years, they would happily borrow us up to an amount for which we would pay off about half of our current family income. Half. That shocks me, frankly. Two kids typically cost about 26% of the family income. Add to that a 50% payment load, and then I see trouble looming ahead. Never mind a car, or holidays - what about sickness, an accident, chronic diseases that easily may pop up in the next 30 years?

It seems to me that many people risk getting into serious problems in the near future. A tough-to-comply-with loan in a boom-economy with high inflation rates (around 10%, the latest figures say) and a rather underdeveloped insurance market... it all seems a recipe for disaster. Whether or not a bank behaves responsibly offering such constructions is of course another debate.

The problem of others may of course offer new and better opportunities to us. As sorry as we feel for those that no longer can meet their obligations, the fact of the matter is that lower housing prices and a lower interest rate can only be beneficial to us. True, the price of our property will go down too (and probably faster, if we factor in the "location location location" element), but we didn't exactly buy the place as an investment. It was at the time simply cheaper to buy than to rent.

So for now, we sit and wait a bit. Perhaps prices are down more after summer, perhaps there are changes in our family income. The need is not that urgent that it can't wait until after the traditional summer camp. Even though there is increasing pressure. Mattias will start to walk soon, and for Joonas, the place is often too small as it is. Then again, probably any place would be.

(*) Two remarks are in order: 1. The pictures are also under this link - just in case the place is sold and removed from the agents site before you read this. 2. Pille insists that I mention that the interior is "typically Russian". I was more talking about the renovation, but I agree that it is a taste I have never seen in Estonian homes :-)