Expert: Rental Price Increases Accelerating

According to Mihkel Eliste, a professional appraiser and analysis expert at Estonia's largest real estate agency Uus Maa, this year's real growth in rental prices has been more moderate than predicted, but there are still signs in the market of accelerating nationwide rental price growth.

According to Mihkel Eliste, statistically rental apartment offering prices rose quite sharply from the beginning of summer, which is largely related to annual seasonal factors. "Rental prices are seasonal – after the school start period, activity in the market decreases sharply again and usually the average offering prices go down slightly by segment. Looking at a longer period, this year's rental price growth has been around 4% from the beginning of the year on Tallinn's example, which is the same as for the entire 2025 year," said Eliste.

"The price increase by segment has been somewhat different – the change in rental prices for cheaper panel buildings, such as those in Lasnamäe, Õismäe, and Mustamäe, is proportionally larger due to the lower final price and higher demand, especially in the case of one-room apartments. This is supported by some improvement in the overall economic environment and consumer confidence, as well as real wage growth. On the other hand, the price level of architecturally newer two-room rental apartments remains quite similar to recent years, pointing to persistent oversupply," said Eliste.

"On average, by the end of this year, one can expect a 4–5 percent increase in rental prices. Over a 12-month perspective, at least at a similar pace, rental price growth is likely to continue, and cheaper areas' rental prices are more likely to grow faster. Rental price growth is accelerating for the third consecutive year, and it's also worth remembering that in the years 2010–2025, the average annual rental price increase was at the 7% level," added Eliste.

According to Uus Maa's analyst, the prices of rental properties in Estonia will inevitably rise in the near future. "The cost of renting compared to income is at nearly the lowest level of the last 15 years, meaning renting is currently historically cheap and rental yields for the owner remain at a low level," noted Eliste.

"Faster rental price growth is somewhat held back by a contradictory trend. Estonians have bought a lot of real estate for rental purposes over the past decade, and as a result, there is extensive supply of rental apartments both in Tallinn and in nearly every small town with at least 5,000 residents. This has created a situation where competition among landlords is tight and rental price growth is limited. However, the total supply of rental apartments in Estonia has been declining quietly for the third year, suggesting a potential acceleration of rental price growth in the near future," added Eliste.