Expert: Buying Your Home Is Still Clearly Cheaper Than Renting Today
In the past year's public debate, an important fact has faded into the background: despite rising prices and bank interest rates, buying your own home remains more favorable in the long run than renting, believes Martin Vahter, head of 1Partner Real Estate.
"I firmly agree with those who believe that now is always a good time to buy your own home. The difference comes down to rental investors paying higher interest rates, for whom the numbers typically don't add up these days, and this has also changed the overall market activity over the year," explained Martin Vahter, head of 1Partner Real Estate, noting that renting a home makes sense for those still saving for a down payment and for those who don't see themselves being tied to Tallinn for the long term.
"I'll give a concrete example of a 2-room apartment in the Stroomi beach area, which can be bought for 90,000 euros. With a 20% down payment and a 30-year loan, calculated at the current euribor rate, the monthly loan payment would be approximately 400 euros," said Vahter, adding that using the 4% fixed interest rate offered on the market, the monthly loan payment would be about 50 euros lower. "You can no longer rent a similar apartment for less than 400 euros per month," Vahter confirmed.
According to Vahter, rental prices will definitely move upward in the long run. "If we assume that euribor moves somewhat down from the current level, this would make the monthly loan payment smaller, which speaks even more clearly in favor of buying a home," added Vahter.
"What is perhaps most important – every monthly loan payment supports your own investment, but rent supports someone else's," Martin Vahter summarized.
1Partner is the leading real estate group in the Baltic countries, with offices in Tallinn, Tartu, Riga, and Vilnius. 1Partner group provides real estate brokerage, valuation, construction, development, management, and investment management services.
