March Brought a Turning Point to the Apartment Market – Small Towns Drive Growth
Estonia's apartment market showed clear signs of recovery in the first quarter, particularly in smaller towns like Haapsalu and Rakvere, where the number of transactions nearly doubled compared to a year ago. Although transaction volumes in Tallinn and Tartu fell slightly below last year's figures, March brought new momentum to the market.
According to Kinnisvara24's statistical center and the Land Board data, Estonia recorded a total of 4,831 apartment purchase-sale transactions in the first quarter, which is 2.7% less than in the same period a year earlier. However, March sent a clear upward signal: transaction numbers grew by nearly 9% across Estonia compared to February, and the number of apartment listings on Kinnisvara24 increased by more than 11%.
"Salaries have grown faster than apartment prices in recent years, which allows more people to buy homes. We also see that confidence is recovering and the uptake of housing loans is increasing," said Urmas Uibomäe, CEO of Kinnisvara24.
Secondary market leads in Tallinn
The beginning of the year was rather subdued in the capital's apartment market, but in March, transaction numbers grew by over 17% compared to February, reaching 779 apartments. At the same time, the number of apartment listings on the Kinnisvara24 portal increased by more than 15% in both Tallinn and the entire Harju County.
According to Uibomäe, the secondary market is primarily driving market activity. New developments are slowly recovering, but the price gap between new and secondary market apartments has grown significantly in recent years. The elimination of the tax deduction increased the net income of higher-paid individuals, creating conditions for new apartment purchases to become accessible to a larger number of people.
In March, the median price of apartments was 2,802 euros per square meter – this is slightly higher compared to a year ago, but fell by the same amount below February's level.
Buyers set the tone in Tartu
In March, the previously slow-moving Tartu apartment market also picked up noticeably – transaction numbers grew by more than 53% compared to February. However, this did not lead to a price increase: the median price of apartments fell to 2,259 euros per square meter, which is 2.6% lower than in February and nearly 12% lower than a year ago.
"In the secondary market, buyers are currently setting prices, although sellers' asking prices have actually grown significantly over the year," Uibomäe acknowledged. According to him, home seekers in South Estonia currently have more room for negotiation.
The number of Kinnisvara24 listings has grown in both Tartu city and the county compared to both the previous month and the same time last year.
However, the most striking changes occurred in the apartment market outside Tallinn and Tartu.
Interest in Haapsalu growing
In Läänemaa, particularly in Haapsalu, the real estate market has been the most active over the year. In the first quarter, the city saw 59 apartment transactions – over 90% more than a year ago. March was particularly active.
Bank statistics already showed last year that the largest growth in loan amounts occurred in Läänemaa, which in turn points to the purchase of more expensive apartments. This year, the most expensive transaction in Haapsalu exceeded half a million euros. However, the median price of apartments has fallen to 1,089 euros per square meter. For smaller places, it should be taken into account that individual transactions have a strong effect on average figures.
Haapsalu's popularity is also supported by its location: the coastal town is only an hour and a half's drive from Tallinn and offers significantly more affordable housing prices, making it well-suited as a home for remote workers.
Largest price increase in Lääne-Viru County
Alongside Haapsalu, Rakvere stands out, where transaction numbers grew by 79.4% in the first quarter, reaching 61 apartments. Lääne-Viru County as a whole showed Estonia's largest price increase in March – the median price of apartments grew by over 34% year-on-year.
The market is supported by the addition of modern residential spaces and improved rail connections, which are making the region increasingly attractive as a place to live.
Moderate growth was also shown in Pärnumaa (+13%), Raplamaa (+13%), Valgamaa (+19%), and Jõgevamaa (+19%). On the negative side, Põlvamaa stood out, where apartment transaction numbers fell by 38% in the first quarter, the largest decline among all counties.
