Estonia raises bank deposit guarantee to 50,000 euros

Estonia more than doubled its bank deposit guarantee to 50,000 euros (68,000 dollars) on Thursday, in line with a European Union-wide move decided two days earlier.

In a statement, the government announced that with immediate effect it was guaranteeing 100 percent of accounts, up to a maximum 50,000 euros or their equivalent in kroons, the national currency.

Previously, the Estonian government had guaranteed only 90 percent of deposits, up to a maximum 20,000 euros.

"The aim of the decision is to treat people within the EU equally and to give additional security to people saving their money in banks in Estonia," the government said.

Baltic state Estonia, which joined the EU in 2004, followed the lead of a handful of other members of the 27-nation bloc, even though most of its depositors had been protected by the existing 20,000-euro guarantee.

"There is less than 20,000 euros in 98 percent of bank accounts in Estonia," Piret Seeman, a finance ministry spokeswoman, told AFP.

A number of EU members have gone beyond the 50,000-euro guarantee agreed by the bloc's finance ministers on Tuesday.

On Wednesday, Estonia's fellow Baltic state and EU newcomer Lithuania had raised its guarantee to 100,000 euros from the previous 22,000 euros.

On Tuesday, EU partners Spain, The Netherlands, Greece and Austria had also announced they were raising their deposit protection to 100,000 euros.

After Germany offered a blanket guarantee on bank deposits on Sunday, Britain, Denmark, France, Portugal and Sweden indicated they had similar plans in the works.

Ireland triggered the rush last week, offering an unlimited guarantee on all deposits at its biggest banks.

Analysts have expressed concern that if European nations set up varying bank deposit guarantees, people may choose to move their savings to the countries with the greatest protection, possibly sparking a flight of funds from states with lower guaranteed deposits.

Source http://eubusiness.com/news-eu/1223546521.77

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Real estate prices in Tallinn down 19% in September 2008

Despite slight growth in transactions and monetary volumes, the prices for apartments continued to decrease in Estonia in September 2008 – as compared to September of the year 2007 the decrease in apartment prices in Tallinn was 19% in September 2008, BBN reported.

Prices of dwellings located in the very centre of the city fell even 25%, real estate company Ober-Haus said in the market overview.

As compared to April 2007 or a period of real estate boom in Estonia, the decrease in prices in Tallinn was 22% on average, and in the centre of the town – 30% on average.

Today prices for apartments in older apartment buildings of dormitory suburbs start from 13,000 kroons per m². Most of the transactions with such apartments are made in a price category from 15,000 to 18,000 kroons per m². The prices for new apartments start from 16,000 kroons per m² in suburbs and from 25,000 kroons per m² in the centre. An apartment in satisfactory condition in the centre of the city can be bought already starting from 18,000 kroons per m². The demand is very weak for apartments costing from 30,000 kroons m². There were only few transactions that were made at the price of 35,000 kroons per m².

The hike in heating costs in autumn will be added to increased payments for mortgage credits. On this basis it is considered rather probable that the number of sales offers will increase, bringing with it additional decrease in the prices, Ober-Haus writes.

Potential buyers pay more attention to municipal costs, mostly heating costs.

Combined use of different types of heating systems could be an important argument when selling an apartment. Thus in the opinion of Ober-Haus, the liquidity of the real estate market is still decreasing and the pressure on the reduction of prices, taking into account the current economic situation, is rising.

The real estate company advises both buyers and sellers to consult experienced specialists before purchasing real estate.

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Estonian CPI rise eases to 10.5 pct yr/yr

Inflation in Estonia eased to 10.5 percent year-on-year in September from 11.0 percent the previous month, though the monthly rate rose to 0.60 percent from 0.1 percent, the statistics office said on Tuesday.

Inflation in the small Baltic state surged during an economic boom and as energy prices jumped, but it has started slowly coming down as the economy slumped back again.

"The index (year-on-year) was mainly influenced by the price increase of food, alcoholic beverages and tobacco, higher prices of motor fuel and transport services and by the increase in the expenditures on housing," the statistics office said.

The September data was slightly higher than the forecasts in a Reuters survey of five analysts, which were for a monthly rate of 0.5 percent and an annual rate of change of 10.4 percent.

The price of goods rose 10.6 percent, including food products up 17.4 percent. The price of services rose 10.3 percent, including regulated price changes of 24.8 percent and non-regulated by 6.6 percent.

The main changes on a monthly basis were the arrival on the market of tobacco products labelled with new tax stamps, a seasonal price increase of clothing and footwear and seasonal price fall of vegetables. Motor fuel prices also fell.

Inflation has surged to double digits in all three Baltic states, being the highest in Latvia at 15.70 percent in August. Lithuania's August rate was 12.0 percent. These countries report their September inflation data on Oct. 8.

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