Boom and Crisis The boom in the Estonian real estate market occurred at the same time as in the USA and in most European countries. The reason for it was also available loans, which were issued mainly by foreign banks that came to the country. Estonian citizens received mortgages at 2.5-3.5% for up to 30 years. The country's accession to the EU in 2004 added fuel to the fire. Both in anticipation of this event, and immediately after it, the speculative demand for Estonian real estate on the part of Europeans increased significantly. As a result, according to the Global Property Guide, for 2000-2007. two-room apartments in Tallinn have risen in price by an average of 448.7%, in Tartu - by 431.5%. Since the initial prices were very low by European standards, at their peak they rose to the average in Western Europe: the cost of a two-bedroom apartment in the center of Tallinn reached 200,000 euros. However, these prices were too high for the country's economy and the real possibilities of buyers purchasing housing for themselves. Banking crisis 2007-2008 superimposed on the political instability in the country, and the market began to fall as quickly as it rose. In addition, hoping for a further rise in prices, during the boom, developers launched a lot of new projects, and by 2008-2009. one could already speak of an overabundance of supply. According to Knight Frank's Global House Price Index, the annual growth of average prices for Estonian housing in Q1 2007 was 21.4%, in Q1 2008 - minus 10.7%, in IV quarter 2009 - minus 40.3 %. In Tallinn, according to the company Ober Haus, during the period from spring 2007 to autumn 2009, housing prices fell by about 50%, and the number of transactions decreased by 55% (by 75% in monetary terms). Thus, in the fall of 2009, two-bedroom apartments on the secondary market in Tallinn were already sold for 50,000-100,000 euros, one-bedroom apartments for 35,000-60,000 euros, and studios for 20,000-40,000 euros. More details . What's going on now? Estonian Statistics Department published in February 2011 In 2010, there were 18% more real estate purchase and sale transactions across the country than in 2009, but the average purchase price in 2010 was about 10% lower. Nevertheless, prices per square meter went up: in Estonia as a whole - by 1%, in Tallinn - by 5%, in Tartu - by 4%, in the resort town of Prnu - by 8%. Thus, the Estonian real estate market is showing signs of recovery, but not nearly as rapid as in neighboring Latvia. Ober Haus reports that more expensive housing has begun to be bought in Tallinn. Therefore, the average price per square meter in transactions for the purchase and sale of apartments increased by 14% (up to 1041 euros) in the period from April 2010 to April 2011. Main areas Foreign (primarily Russian) real estate buyers are interested in several areas of Estonia. First, Tallinn. Here they buy housing for themselves or for rent. The most expensive objects of the country are concentrated in the center of Tallinn and the capital suburb of Pirita on the coast of the Baltic Sea - elite apartments and villas worth several million euros. In non-central districts of Tallinn, two-room apartments are sold for 50,000-60,000 euros. Buyers looking for vacation homes tend to prefer resort areas (including mud resorts) known since Soviet times. These are Narva, Kuressaare, Prnu, Toila, Haapsalu. There are also expensive offers here, but in general real estate is much more affordable: a house can be bought for 100,000 euros. Petersburgers are also interested in rural houses near the Russian border. Real estate in the eastern part of the country is even cheaper. In addition, Russians can purchase affordable real estate in order to apply for a multiple Schengen visa. Irina Filatova
Lyudmila