Expert: Multiple Events' Combined Effect Brings Turning Point to Real Estate Market
According to Igor Habal, a member of the board of Estonia's largest real estate agency Uus Maa, the real estate market is operating at 20-30 percent lower activity compared to its peak, and a series of positive news would turn the market upward.
"Both in terms of the economy and general trends, the indicators are not objectively getting significantly worse. The entire real estate market is waiting for positive signals and ultimately, the trend curve is more important than the extent and pace of euribor decline – successive positive news in the economy brings homebuyers back to the market," said Habal.
"On one hand, the market is clearly waiting for euribor to decrease and its decline to three percent would already be a significant change. On the other hand, bank competition for homebuyers has grown this year – the decline in loan interest and loan costs has brought about a refinancing wave, which has sown the first seeds of market growth. Changes in interest rates and general economic inertia typically reach real life with a lag, meaning these changes do not immediately reflect in consumption and investments. However, when a person needs a home, at some point postponed transactions are simply completed," added Habal.
"Positive economic indicators combined with falling interest rates will first and foremost bring about higher market activity, but prices will remain more or less at current levels, at least for now. A buyer's market should continue for at least another half year and there is more room for conditions. Some investors took too much risk at the peak and are now trying to cash out their assets, which is why one can find favorable offers on the market that haven't been seen in years," said Habal.
"I am not afraid that new apartments will run out in the next year or two and create a deficit comparable to 2022. Currently, an average of 1000 new apartments are sold annually, but inventory reserves are nearly 2200 apartments and roughly the same number received construction permits last year," said Habal.
