Factors that influence the growth of housing prices in Estonia
The Estonian real estate market began to grow actively after the lifting of quarantine restrictions. Since then, its dynamics has not slowed down, aided by the interest of buyers. They purchase housing in Estonia, thereby stimulating the growth of its prices.
As a result, supply decreases on the market, while the high demand persists. The fear that there are fewer and fewer objects available, spurs the growth of the cost of square meters. However, the pace of construction has recently increased significantly, and experts hope that this factor will slow down the overheating of the market.
After the pandemic, trends in the Estonian housing segment have changed. If earlier investors were mostly interested in one-and two-bedroom apartments, now the demand for variants with three and four rooms has increased. High demand remains for new buildings as well as objects of the secondary market. Buyers buy housing in the capital and outside it, there is no clear reference of price growth to a certain region.
Experts point out that activity in the segment reached its peak values. The main reason for the surge is a delayed transaction. During the pandemic, many buyers refused to buy, preferring to observe how the situation would develop. Now that the country is experiencing a recovery, both consumers and buyers have become active. People are trying to buy real estate as quickly as possible for fear of missing out on a good offer or prices starting to rise. The reason is also the desire of people to profitably invest the money that has been accumulated during the quarantine period.
The market hype has caused an increase in interest in banking services. More and more people take out loans to buy housing. Last month the volume of mortgages issued increased by 156 million euros.
As for the cost of apartments in Tallinn, a square meter will cost 3 thousand euros. Analysts note that such high prices have never been observed in the local segment. Moreover, according to forecasts, this figure will not decrease, and there is a possibility that the cost will continue to grow. One factor in the rise in price is the increase in living standards in Estonia.
Research from the company Luminor indicates that about 50% of young families are considering changing homes in the coming years. They are willing to make a monthly loan payment of 300 euros. In this case, to buy a property without a mortgage, such buyers will need about 13 years to collect the necessary amount.
If the rate of market development in the country will continue at this rate, the risk of overheating the segment, which leads to negative consequences for the economy as a whole. So far, the factor slowing the growth of prices is an increase in construction and new facilities.