Andree Raid: This Winter Is the Best Time to Buy a Home

In the residential real estate market, it is worth making property purchase decisions during this winter. The residential real estate market is on its way up from the bottom, and those who postpone purchase decisions will have to settle for a more expensive price tag in the future. The positive shift in market sentiment is indicated primarily by euribor and loan risk margins, both of which have declined, and the number of transactions that have remained high over the last five months.

Buyers are back on the market

Since July 2024, the number of apartment transactions in Tallinn has remained at a high level. This shows that home buyers who previously postponed their purchase decisions have returned to the real estate market to make transactions. For the most part, residential property prices move in the same direction as the number of transactions, but with some delay.

Real estate buyers' willingness to make transactions has been supported by declining euribor and loan risk margins. In addition to all this, banks are competing very seriously with each other and poaching clients from one another. No real estate transaction remains unsigned because the buyer cannot obtain a loan.

Rental investors are still waiting

Looking further into the future, one can hope that at some point the interest of rental investors in the market will be restored. Today's investment in purchasing a rental apartment is not very attractive from a yield perspective. The reduction in the volume of rental offerings coming to the market will help push rental prices upward. This will encourage small investors to look more towards the rental market in the new year.

Hopes for the end of the war in Ukraine could turn the Estonian real estate market on its head. If Ukraine begins rebuilding, it will drive up the prices of building materials and services. The increase in construction costs will inevitably raise the price of real estate here.

A smart homebuyer makes a deal this winter

Home buyers should be smart. If the idea of buying a home is on the agenda, it is worth making the transaction during this winter. The volume of offerings is large, which means that home buyers have a wide choice in both new and secondary market apartments. This makes it easy to find a real estate object that meets all needs.

The level of residential property prices supports buyers. Price levels have already been moving horizontally for a year and a half. This confirms that in conditions where interest rate declines make purchases more affordable, a downward movement in prices is not a very likely scenario. The overall price level remains stable, but negotiating some price reduction from the real estate seller is more of a rule than an exception.

The real estate market has gone through ups and downs. For a year and a half, the residential real estate market has been standing still. By now, there are several glimmers of light at the end of the tunnel, which suggest that the situation is beginning to move in a better direction. Certainly, one should not expect rapid changes, much less a major price increase. A declining interest rate, a favorable and stable price level, and a wide range of options are strong factors that could encourage a rational homebuyer to make a deal this winter.