The Estonian real estate market has entered a “ticking” phase, where revolutionary events are not expected until spring.
The statistical aspect of the apartment market in October was characterized by a decrease in the prices of second-hand apartments, an increase in the prices of new living spaces, and a downturn in sales transactions. True, since the decline began a year ago, we can see some stabilization over the 12-month comparison.
The rental market has also quieted down as the annual student rush, so to speak, has ended. There has been an increase in offerings, especially in Tallinn, where the motivation for buying many new apartments was to earn rental income.
Although we are facing a tax increase and there is an economic downturn, perhaps a small ray of sunshine can be seen in the fact that the larger wave of interest rate hikes intended to control eurozone base inflation has now ended. In the future, we can expect a standstill and perhaps only a few minor increases. This could mean that the possible amounts of home loan payments will gradually settle, and the knowledge of what amounts to expect in the future may become somewhat clearer.
However, those who are expecting a rapid decline in interest rates to previous levels will be disappointed because neither the central bank nor anyone else is likely to consider this anytime soon. More favorable loan conditions are therefore more likely to come as a result of competition between banks.
Apartment market stable
In October, a total of 1,782 apartments were sold in Estonia according to the land board’s data (1,770 in September), with a median price per square meter of 1,917 euros. The price level fell by 4% in the month and 5% in a year. While transaction numbers have stabilized compared to the previous month and the same period last year (because the decline began last autumn), we now see more clearly that the price level has also started to fall. These two processes have generally always moved in tandem.
In Tallinn, 678 apartments changed ownership in October (664 in September), with a median price per square meter of 2,928 euros. While the price level increased by 4.4% in the month, it increased by 2.1% in a year. For Tallinn, the phenomenon that second-hand real estate has become cheaper and new apartments have become more expensive is clearly an influencing factor. As new buildings continue to be completed, this property has a strong impact on statistics.
In Tartu, 119 apartments were sold in October (176 in September), with a median price per square meter of 2,109 euros. While the price level fell by 9.9% compared to September, it fell by 4.9% in a year.
In Pärnu, 99 apartments were sold in October (63 in September), with a median price per square meter of 2,410 euros. Compared to September, the price rose by 38.7%, and in a year by 25%. Looking at both the number of transactions and the increase in price, we see a clear connection to new apartments, which were actively notarized in October.
In Narva, 73 apartments changed ownership in October (79 in September), with a median price per square meter of 510 euros. The price level decreased by the same amount, 4.3%, in both the month and the year.