Real Estate Market Slows Down, People Buying by the Piece

In April, the real estate market in Estonia's four largest cities was quiet again. The price per square meter of apartments is becoming increasingly important, and buyers are making more corrections in their purchasing decisions.

We have already written a lot about Euribor and there is nothing new to add here. The European Central Bank is still not satisfied with the level of core inflation, and there are certainly more interest rate hikes ahead. This continues to affect people's creditworthiness, even in a situation where the number of loan applications has actually increased.

It is increasingly evident that people are buying apartments based on price per square meter and making corrections in their original purchase decisions in favor of smaller rather than larger spaces. Therefore, we do not see large fluctuations in the median price per square meter of transactions, since a smaller total area always has a higher price per unit than a larger one. However, this is reflected in the total transaction volume.

In asking prices, we see more favorable price levels than before and also slogans like "new price," but on the other hand, there is still experimentation with high prices. It must be remembered that for the buyer, the price must be justified and there is little room for emotion. If an apartment is located on the outskirts of a major road, its price must be lower than an equivalent living space in an inner courtyard, and a livable but actually outdated apartment should not cost as much as a similar renovated one.

In summary, the current sales market can be described in these words: those who need to sell are selling, and those who have sustainable borrowing capacity or full self-financing are buying.

The market was slower in April

In Tallinn, 687 apartments changed hands in April (827 in March), with a median price per square meter of 2,771 euros. Compared to March, the price level rose just 0.2% and 4.8% year-on-year.

In Tartu, 134 apartments were sold last month (196 in March), with a median price per square meter of 2,332 euros. While the price level fell 5.7% month-on-month, it grew 3.8% year-on-year.

The Pärnu apartment market, however, saw a slight increase in activity. In April, 81 apartments were sold (76 in March), with a median price per square meter of 1,965 euros. Compared to March, the price level rose 4% and 16.2% year-on-year.

In Narva, 71 apartments found new owners in April (93 in March), with a median average price per square meter of 510 euros. While the price level fell 14.9% month-on-month, it fell 3.4% year-on-year.

Article author: Risto Vähi, Uus Maa Real Estate Bureau analyst