Analyst: New Developments Are Being Rented Out Building by Building and This Affects Prices

According to Risto Vähi, analyst at Estonia's largest real estate agency Uus Maa, sales of new apartments have stalled, which is why developers have started renting them out in large volumes at once.

According to Vähi, sales of new apartments are progressing slowly because developers are unwilling to lower their prices, but people are not willing to buy at the old prices anymore. "Developers are currently able to pay off their loans and are trying to earn cash flow in the meantime by renting out apartments instead. This way, 50 apartments can come onto the rental market in one location at once, and this already affects the entire area," said Vähi.

"In Tallinn, the number of rental offers has increased significantly. When dozens of apartments from the same building and area come onto the rental market at once, then that provides quite good negotiating room. Rental prices are slightly trending downward and the decline mainly affects new and more expensive apartments," said Vähi.

"In the cheaper segment, for example dormitory apartments with rent below 500 euros per month, there is always demand and we shouldn't expect major changes in that regard. Oversupply of rental apartments mainly affects Tallinn and also, for example, Pärnu; in Tartu, new developments of this scale have not been built and the supply there is more stable," said Vähi.

"A new trend is also that people are selling their personal apartment and taking a rental space at the same level instead. They are waiting for better times to buy a home they like again," added Uus Maa real estate agency analyst.