In October 2022 apartment-related deals in Estonia dropped to the level of 2016. It is likely this level will remain across the entirety of 2023, as Estonian ERR was told by Arco Vara real estate firm.
The average apartment price in Estonia was 2 035 EUR/m2 in October, which is 5% higher when compared with September of the same year. However, it does not reflect the real situation in the market. It is more a result of deals with new apartments, informs Arco Vara.
«As of the beginning of November, the average price of sales offers on the Tallinn apartment market was almost five percent lower,» explains the real estate firm, adding that prices in different regions of the country started going down in October. This was especially true for residential districts of Tallinn located farther away from the city centre.
A total of 1 771 apartments were sold in Estonia last month, which is an 8.9% drop when compared with the month prior and a drop of 33% when compared with October 2021.
Arco Vara commented: «This decline in market activity was relatively expected, as already as early as September it could be observed that liquidity in the housing market in general has deteriorated sharply and sales timeframes have started to lengthen clearly against the backdrop of the growing volume of offers».
The real estate price surge in Estonia’s biggest cities stopped at the start of autumn, when sellers started cutting prices. Sellers’ unrealistic expectations are falling apart because it is no longer easy to achieve sales. This means demand for real estate agents may go up soon, as informed by Arco Vara.
The company reported that the rent market is subject to these changes as well. If the six-month Euribor rate reaches 4% next year, it is possible apartment rent may become more economically viable than paying off mortgage. This is especially true for the exclusive housing segment.
As for construction, information from Arco Vara indicates that construction of apartment homes is back to its pre-Ukrainian war level. House construction costs are also lower than it was in summer, especially when it comes to prices of construction materials.