Home Buyers' Preferences: Energy Efficiency Has Become More Important Than Square Meters

If a few years ago the size of the property was an important criterion for home buyers, today the focus is instead on monthly expenses and the long-term value of the property. The preference for energy-efficient homes is increasingly shaping the construction market as well.

The high price level of new developments has made home buyers' behavior clearly more pragmatic. While previously moving to a new home often meant acquiring a larger living space, today choices are determined primarily by the purchase price and the costs associated with property ownership. Thus, the average property size has remained at the same level over the past few years, averaging 55 square meters.

„The price increase in new developments partly directs buyers toward the secondary market or away from shopping centers, but those who do not want to make compromises on location adjust their expectations regarding home size. This is understandable in a situation where we can today find new buildings at a price of 4,500 euros per square meter and more," explained Sille Hallang, head of SEB's private banking division.

If the size of homes has not increased, then the number of transactions decreased this year compared to the first calendar month of the previous year in Tallinn by -12.7% and throughout Harjumaа by -15%, while in the rest of Estonia transactions remained at the same level.

„The decrease in the number of transactions in Tallinn and Harjumaa may reflect buyers' greater attention to prices and the energy efficiency and overall quality of apartments. Buyers are weighing increasingly carefully what property to buy, preferring solutions that are more economical and offer better quality of life," said Urmas Uibomäe, CEO of Kinnisvara24.

Purchase decisions are influenced by energy efficiency and heating systems

„The wallet is often the first thing that choices are made based on, and if a person saves on both ongoing utility costs and the monthly loan payment, that is sufficient motivation to choose more sustainable property. Since property with A and B energy efficiency has a better loan interest rate for home buyers, energy efficiency is no longer simply a bonus today, but a conscious requirement for many home buyers. Higher quality materials also mean more liquid property, the value of which is maintained over time," explained Hallang.

With liquid property, it is also important to have heating systems that offer both efficiency and low costs. If electric heating owners face a sudden increase in utility bills during colder periods, expectations for the availability of alternative solutions have risen.

„The popularity of electrically heated homes has decreased in recent years. After the energy crisis, buyers have become more cautious, and so increasingly alternative heating solutions are preferred - air-water and ground source heat pumps, district heating, and hybrid systems," highlighted Uibomäe.

He added that the sales period for electrically heated homes may be longer and the price more sensitive, especially if the building's energy efficiency is not high. At the same time, well energy-efficient electrically heated homes, for example combined with solar panels, can still sell well on the market.