Expert: The Impression of Real Estate Cheapening is Actually Misleading
The recent drop in the average price per square meter of Tallinn apartments may create a misleading impression that real estate has become cheaper. In reality, the vast majority of apartment prices have still risen over time, and the statistics have been affected only by the fact that transactions in new developments with high price per square meter have decreased significantly, explained Martin Vahter, head of 1Partner Real Estate.
"If we take as a basis the classic indicator of Tallinn's real estate market, namely the Soviet-era 2-room apartment in Lasnamäe, then compared to the beginning of 2022, the price per square meter of these has increased by about 6%," described Martin Vahter, head of 1Partner Real Estate.
In a situation where transactions in new development apartments are declining, it is expected according to Vahter's assessment that the statistical average price per square meter will also fall. "Everything depends on the structure of transactions. If the statistical average fell by more than 10% in January this year compared to December 2023, that does not mean that such a decline has affected, for example, those same older 2-room apartments in Lasnamäe," explained Vahter.
Vahter said that the same principle applies even in conditions of a rapidly rising market, meaning that all apartments do not automatically become more expensive by the amount of the increase in average price per square meter. "The current decline in average price per square meter does not mean that all apartment prices are falling, but rather that older apartments with a lower price per square meter are setting the tone in transactions," explained Martin Vahter.
