After a decade of continuous price growth, the Estonian housing market is currently cooling down amid domestic economic problems combined with high inflation, rising interest rates and an unfavorable geopolitical situation.
The demand for real estate is falling sharply. According to the Estonian Land Department, in the first half of 2023, the number of purchase and sale agreements in the country decreased by 24.1% compared to the same period last year.
The cost of contracts also decreased in the first half of 2023 by almost a third compared to last year.
"If in 2021 the demand for new apartments exceeded the supply, and most of the apartments were sold before the completion of the construction of the house, then since the third quarter of 2022, demand, on the contrary, has sharply decreased," the Ober Haus report says.
According to the Statistics Office of Estonia, during the year up to the first quarter of 2023, the national housing price index increased by 9.16%, which is a sharp slowdown compared to the growth of 21% in the previous year and the lowest annual growth since the first quarter of 2021. However, adjusted for inflation, prices actually decreased by 6.8% during the year to the first quarter of 2023 - this is the second consecutive quarter of year-on-year decline and the worst performance since the fourth quarter of 2009.
According to the Ober Haus report on the real estate market for 2023, the number of apartments for sale in Tallinn and Harju has increased by 50% compared to the same period last year.
"The most in demand in the vicinity of Tallinn are new or not older than five years, with an area of 120-160 sq. m, with modern technical solutions and economical heating systems. Prices range from 200,000 to 300,000 euros, the report says.
The prospects for the Estonian housing market in 2023 remain gloomy, as the economy as a whole continues to experience difficulties.
Source: Global Property Guide
