Annual Price Growth of Apartments in Tallinn Slowed Down

In January, Tallinn's apartment annual price increase was 9.7%, which is significantly less than what we saw during the recent years of investment boom and inflation rally.

On Estonia's real estate market, Tallinn has always been a trendsetter both in rises and declines. Looking at January as well, we see the same pattern – while the annual price growth figure in the capital was already below 10%, in other major Estonian cities it was still above 20%. Whether Tallinn is now showing the direction and the annual growth percentages in the remaining cities will also fall similarly will be shown in the coming months, but considering that the statistics depend on the comparison base, which is also changing significantly higher elsewhere, one could assume that this is exactly how it will go.

In other respects, the main topic of conversation on the real estate market continues to be home loans and the growing six-month euribor, which recently exceeded the 3% mark. It is clear that we will not see cheap loan money anytime soon, and for home buyers, the decisive question becomes how much longer euribor will grow and at what level it will stabilize.

January is always a quieter month in terms of transaction activity, which means that going forward we will see the market become more lively again. True – the number of sold objects will remain lower for a longer time compared to the same period in 2022, and asking prices are also falling. On the other hand, buyers' concerns related to heating and electricity prices have decreased, so in spring we may see some brighter notes in the market. However, it is still too early to talk about a major recovery, as uncertainty and lack of knowledge are still too great for that.

Prices rose month-on-month in Tartu

According to the Land Board, 452 apartments were sold in Tallinn in January (811 in December), with a median price per square meter of 2,637 euros. In Tartu, the price level fell 16.3% month-on-month, which is due to an exceptionally high price level in December. As we recall, the unusually high share of new apartments in transaction statistics caused that record median price of 3,152 euros per square meter at the time. The price level of apartments rose 9.7% over the year.

In Tartu, 117 apartments changed hands in January (124 in December), with a median price per square meter of 2,349 euros. The price level grew 6.6% month-on-month, but 24.5% year-on-year. The main factor in the university city market was new apartments with higher prices.

In the summer capital of Pärnu, 73 apartments were sold in January (61 in December), with a median price per square meter of 2,088 euros. While the price level fell 3.1% month-on-month, it rose 30.3% year-on-year.

In Narva, 45 apartments found new owners in January (61 in December), based on which the median price per square meter was 521 euros. Compared to December, the price level fell 3.2%, but grew 24.6% year-on-year.

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