Eamets: Real Estate Value Has Increased Along with Inflation

Fresh data on the housing price index released today by Statistics Estonia shows that the European Central Bank's interest rate cuts and the accompanying decline in euribor have begun to gradually impact the housing market. While housing index prices fell slightly in the second and third quarters of last year compared to the previous quarter, we are now seeing growth. The housing index rose 3% in the first quarter of this year compared to the fourth quarter of 2024. 

In year-on-year comparison, apartment prices grew by 2.7% and house prices by 8.9%. Based on Tallinn housing market data, it can be argued that this price increase reflects more the growth in second-hand apartment prices, as the revival of the real estate market started from the secondary market. Fewer new apartments, which were already initially much more expensive, were purchased, meaning their share of all housing market transactions decreased. 

Compared to the beginning of the economic crisis (Q1 2022), apartments have become 21.8% more expensive and houses 26.2%.  The overall price increase (CPI) for the same period has been 27%. This shows that real estate (especially houses) has been more or less protected against price increases, meaning people who invested in real estate at an earlier time have increased the value of their assets along with price growth.