Expert: Low Scandinavian Real Estate Market Will Keep Building Affordable in Estonia for Some Time

According to Toomas Pärtels, Chairman of the Board of Puumarket, the largest timber trading chain in the Baltics, the downturn in the Scandinavian construction and real estate market keeps construction labor availability and material prices favorable in Estonia, but demand is growing both in Estonia and the Nordic countries, which will bring changes to the market. 

According to Toomas Pärtels, construction sector in Estonia currently follows the rules of a buyer's market, similar to the real estate market. "Building materials are affordable and we are affected by low demand in Scandinavia, from where many good builders have returned. For both larger projects and smaller home renovation work, it is relatively easy to find a builder right now. However, some builders say their work schedule is already full for the next six months," said Pärtels.

"Both the Finnish and Swedish construction markets have been in a downturn over the past 2-3 years along with the general economy. However, stronger economic growth, approaching two percent, is being forecast for both countries next year. Mainly, lower Euribor affects construction and real estate market demand both there and in Estonia," said Pärtels.

"Estonian developers have already picked up the pace – in the third quarter of this year, the number of building permits issued for residential areas grew by 65% compared to last year. The growth in construction market demand is also shown by rising timber sales – in the first half of this year, 8% more was purchased in cubic meters than in the same period last year, and sales of other general construction materials are also on an upward trend," said Pärtels.

"Currently it is still a buyer's market, but when all these building permits are put into work, it will certainly affect at least finding builders and will likely reach to some extent the prices of building materials. Building material prices have risen less than general inflation so far and in some categories have even fallen – timber material is 40-50% cheaper compared to 2022," noted Pärtels.

"Over the next six months, there is no reason to expect a sharp increase in building material prices, but it will likely be easier and cheaper to build now than next autumn," Pärtels predicted.