The best time to purchase real estate comes before the decline of Euribor

The best time to purchase real estate comes before the decline of Euribor

According to Igor Habal, the leading analyst and board member of Estonia’s largest real estate agency Uus Maa, the most favorable time to buy real estate is likely in the first half of this year, at the peak of low consumer confidence, before the first significant drop in the Euribor rate.

Igor Habal states that towards the late spring and early summer of this year, a decrease in Euribor is expected. Even if it is only by 0.25 percentage points, this is anticipated to boost consumer confidence. “The economy is inert, and unemployment is expected to continue growing for some time. Similarly, real estate transactions reflecting market bottom will be recorded in statistics with a delay in the first half of the year, indicating a decline and, in turn, influencing market sentiment,” said Habal.

“The decrease in Euribor will not immediately trigger a new real estate buying spree, but liquidity will gradually improve. Therefore, it is likely the most favorable moment to acquire real estate is before the Euribor change. Currently, it is clearly a buyer’s market, and substantial discounts, tens of thousands below the asking price, are attainable for more expensive apartments. However, this window of opportunity may not last indefinitely,” stated Habal.

“The exact market bottom can only be assessed retrospectively, after the arrow has already turned upward. The second half of last year already showed that wage growth outpaced the increase in real estate prices, indicating that, if this trend continues, accessibility will improve even in an environment with a high-interest rate. Currently, transaction volume is 20-30% lower than its peak, but there is no apparent catastrophic economic downturn, and at some point, transaction activity is expected to pick up,” added Habal.

“Homebuyers often live in the moment, dealing with one crisis at a time – during a boom, everyone wants a new home, during a downturn, there’s uncertainty, and with a rise in loan interest rates, breaths are held. Purchasing a home should be viewed with a longer-term perspective, considering that various fluctuations occur over time. The notably low percentage of problematic loans indicates that, in reality, people are managing, and historically, real estate prices eventually rise along with the overall economy. Essentially, those who bought real estate in the three decades leading up to the peak in 2022 should now be in a positive position,” added Habal.