The current state of the real estate market can be likened to that of a grocery store, where purchases are primarily driven by necessity or attractive pricing, while high-end emotional acquisitions occur less frequently.
Despite the absence of a notable decline in average square meter prices, the market is currently experiencing a downturn, evidenced by a decrease in transactional activity compared to the previous year. It is imperative to address the sobering reality that we are currently at the nadir of the real estate market and will likely remain in this phase for an extended period. Consumer confidence is wavering, leading to a prevailing “wait-and-see” attitude among potential buyers.
While traditionally, location has been deemed the most critical criterion in real estate transactions, this notion is gradually being supplanted by an emphasis on pricing considerations. Properties that align with the financial feasibility of potential buyers are currently in high demand. While instances of emotionally-driven purchases and sales of high-value real estate do occur, the robust momentum witnessed a year and a half to two years ago within this segment is no longer palpable.
Therefore, when considering the sale of real estate, it is advisable to adopt a similar approach as one would in a grocery store, ensuring fair pricing and accessibility for potential buyers. This entails eschewing experimental pricing strategies and aligning the property value with current market standards.
When discussing the prospective trajectory and eventual recovery of the real estate market, it is imperative to closely examine the economic landscape, of which the real estate sector is a significant reflection. Notably, the improvement in market sentiments within the apartment and housing sector hinges on a concurrent amelioration of broader economic uncertainties.
Decline in Transactional Activit
In the Estonian market, the apartment segment witnessed a decline in activity during the month of September, with a total of 1742 property transactions recorded nationwide, compared to 1932 transactions in August. The median price per square meter settled at 1994 euros, reflecting a 2.2% decrease from the previous month but a 2.7% increase compared to September of the preceding year.
Similar trends were observed in Tallinn, where 662 apartments were sold, marking a decline from 682 sales in August. The median price per square meter was reported at 2805 euros, registering a marginal 0.7% increase from the previous month and a 1.4% rise year-on-year. Stability in price levels is increasingly discernible in the Tallinn market, with fluctuations remaining within the realm of statistical insignificance.
While new developments had a pronounced impact on Tartu’s real estate statistics in August, the subsequent month witnessed a renewed downward trend. September recorded the sale of 173 apartments, signifying a decrease from 208 transactions in August. The median price per square meter was established at 2315 euros, reflecting an 11.6% decline on a monthly basis and a 14.3% increase year-on-year.
Meanwhile, the city of Pärnu experienced a similar downward trajectory, with 63 apartment transactions in September compared to 70 in August. The median price per square meter amounted to 1737 euros, representing a 3.1% decline from the previous month and a 5.8% decrease from the corresponding period last year.
In contrast, Narva exhibited a notable upswing in transactional activity, recording the sale of 78 apartments in September, up from 63 transactions in August. The median price per square meter was reported at 532 euros, indicating a 7.5% increase compared to the previous month and a 2.1% rise year-on-year.