The real estate market in March remained low in terms of activity, confirming the stability observed over the past year, reminiscent of the levels seen in 2016.
Transaction prices also remain stable – on one hand, a responsible lending environment and resilient labour statistics prevent prices from dropping, while on the other hand, economic downturns materialize most severely in the months just before the onset of recovery, thus increasing the likelihood of situations where properties can still be acquired with discounts larger than the average. However, a significant market correction has already occurred, and today market participants are cautiously and inquisitively looking towards banks, which are expected to introduce the first interest rate cut in the coming months. However, it’s not advisable to make overly bold plans just yet, as we don’t foresee significant changes in the market in the near future.
The apartment market didn’t offer any major surprises
The apartment market in March didn’t bring a turnaround, with slightly fewer transactions being finalized compared to February (1499 and 1472, respectively), and for the second consecutive month, the median transaction price decreased compared to the previous year. In the first quarter, there was a 7.7% decrease in transactions across Estonia compared to the same period last year (a total of 4263 transactions), while the median transaction price decreased by 2.2% to €1987/m2.
In Tallinn, according to preliminary data, 574 apartments changed ownership, a lower figure than in February. However, the activity, which has not yet translated into transactions (such as contractual agreements in new developments), suggests that the market has left behind its downturn, remaining stable since May of the previous year. In the first quarter, 1725 transactions were concluded, almost 9% less than in the same period last year. The median transaction price in the first quarter remained the same as the previous year, at €2730/m2. This indicates a further reduction in the likelihood of price decreases beyond the approximately 10% decline from the peak.
In Tartu, according to preliminary data, 116 apartments were sold, the same number as in February. In the first three months of the year, 321 transactions were concluded in Tartu, 21% fewer than in the same period last year. The median transaction price in the first quarter was €2334/m2, 7% lower compared to the same period last year.
Pärnu market has been affected by a decrease in the number of second-home buyers and investors from other cities. In March, preliminary data shows that 51 transactions were concluded, the best result for this year, but compared to the first three months of last year, the number of transactions has decreased by 50%. The median price per square meter in the first quarter was €1827, which was 16% lower than the same period last year.
In Narva, due to lower loan amounts and consequently lower monthly mortgage payments, the real estate market’s activity has declined to a lesser extent compared to other major cities. According to preliminary data, 72 transactions were concluded, the highest number for this year so far. In the first three months of 2024, 194 transactions were concluded, six more than the same period last year. The median transaction price in the first quarter was €495/m2, 12% lower than the previous year’s level.