Transaction volumes are on the rise, prices are steadily increasing, and market confidence is gaining momentum. While economic challenges and policy changes continue to shape the landscape, buyer interest remains high across key cities, signaling a positive shift.
The Estonian real estate market began 2024 with unexpected momentum. At the end of last year, we conducted a survey among its real estate specialists to assess the outlook for 2025. The results were moderately positive, forecasting a 4.4% increase in transaction volume, with Tallinn and Harjumaa expected to see 5.2% growth. Sales prices were projected to rise by 2.7%. Similar to the previous year, the impact of tax hikes is anticipated to temper market activity in the first half of the year, while the latter half is expected to gain momentum. Given that the beginning of 2023 was relatively subdued compared to later months, the year-on-year comparison now reflects an unexpectedly strong growth trajectory.
Estonian Apartment Market
Preliminary data indicates that the number of apartment ownership transactions across Estonia surged by 20.4% year-over-year, reaching 1,562 transactions. Despite this increase, the figure remains the lowest recorded since July 2023 and stands 16% below the level observed in January 2022. The median transaction price rose by 7.5% over the past year, resulting in a 4.7% increase in real prices. Given the rapid inflation of recent years and the relative stagnation in property prices, it is likely that real estate price growth in 2024 will outpace inflation.
While activity in the secondary market began to accelerate in Tallinn, Tartu, and Pärnu during the second half of 2023, the overall transaction volume for the year still declined. This was primarily due to a sharp reduction in the number of previously contracted new development transactions, which were largely signed in the second half of 2022 and throughout 2023. Moving forward, the 2024 market will play a more significant role in shaping new development transaction volumes, suggesting a potential statistical rebound. The market’s performance in the first month of the year has already demonstrated remarkable strength.
In Tallinn, an estimated 695 transactions were completed, representing a 28% increase compared to the same period last year. The median transaction price rose by 3.4%, from €2,721/m² to €2,813/m², while the total transaction volume grew by 35%. In Tartu, approximately 132 transactions were finalized, with a median price of €2,309/m². The number of transactions increased by 47% year-over-year, while the median price saw an annual growth of nearly 15%. Pärnu exhibited even stronger growth, with the number of transactions rising from 24 to 42, and the median price increasing by over 16%, reaching €2,073/m².
The only major city experiencing a decline was Narva, where residents protested high heating costs in January. However, this did not significantly impact transaction activity, as 73 transactions were recorded compared to 63 the previous year. Nonetheless, the median price declined for the second consecutive month, falling from €477/m² to €430/m².
The year has commenced with a level of market activity that exceeds expectations, suggesting a renewed sense of confidence in the Estonian real estate sector and setting the stage for a potentially strong performance throughout 2024.