July real estate market characterized by decline
In July, the apartment market in larger cities showed a decline both in terms of transactions completed and price levels. Whether this was just a summer slump or a broader trend, we'll see in the coming months.
Opinions on the future development of the market tend to diverge. Everything depends on which indicators are used as a basis and what to forecast from. On the positive side, inflation is decreasing and no significant winter rise in energy prices is predicted. On the negative side, the more important aspects are the poor state of the economy, high loan interest rates, and low buyer confidence.
Taking these factors into account, it is foreseeable that in the near future, a situation similar to the current one will continue – the market is functioning and transactions are being made, but there is much caution and transactions are being reached more slowly.
The most sought-after properties are apartments in good condition or renovated apartments where you can move in immediately or the volume of necessary work is small. On the other hand, there is also demand for cheaper apartments requiring renovation.
However, what has become very evident is that when a well-priced, above-average quality apartment with a stylish interior and building is put up for sale, interested buyers come immediately and often there is even overbidding. This shows that there is a target group for quality second-hand apartments who are currently in what could be called standby mode.
Apartment market slows down
In July, according to the Land Office data, 1,649 apartments were sold throughout Estonia, which is 15.6% less than in June. Compared to July last year, transaction activity fell by 24.1%, and sales of this magnitude have characterized the Estonian real estate market for over half a year. The average median price per square meter of an apartment across Estonia was 2,120 euros in July. The price level fell 5.5% during the month, but rose 1.9% year-on-year.
In Tallinn, 643 apartments were sold during July (810 in June), with a median price per square meter of 2,921 euros. While the price level fell 5.7% during the month, it rose 4.3% year-on-year.
In Tartu, 157 apartments changed ownership (173 in June) and the average median price per square meter came to 2,324 euros. The price level fell 4.2% during the month, but rose 7.9% year-on-year.
In Pärnu, 51 apartment purchase and sale agreements were concluded in July (62 in June), with a median price per square meter of 1,557 euros. While the price level fell 21.5% during the month, it fell 9.9% year-on-year.
In Narva, 66 apartments were sold in July (68 in June) and as a result, the median price per square meter was 531 euros. While the price level fell 0.7% during the month, it fell 1.3% year-on-year.
Thus, it can be said that the double-digit annual price increases that have long characterized our apartment market have now ended and in some places have already been replaced by decreases.
Article author: Risto Vähi, Uus Maa Real Estate Bureau analyst
