What Was the Real Estate Market Like in the First Half of 2023

Kinnisvara24's summary of the apartment sales market for the first half of 2023 shows that the number of sales offers increased compared to the same period last year by up to twice depending on the region. Since the transaction market is more passive compared to the previous year, the inventory of apartments is growing. Due to the general increase in the cost of living, sellers are not willing to reduce prices, and compared to 2022, the price per square meter of apartment transactions in major cities increased.

The most apartments are offered for sale in Tallinn: the six-month statistics show that over the course of one month, potential buyers were able to view an average of more than 4,300 apartment sales listings located in Tallinn. Each month, an average of twice as many apartment sales listings were added to the Kinnisvara24 portal compared to the same period of the previous year.

Two- and three-room apartments were offered for sale the most, accounting for approximately 70% of Tallinn's apartment sales offerings. When compared to the first half of 2022, the number of sales offerings for two- and three-room apartments increased this year by 37% and 59%, respectively. The number of sales listings for one-room apartments and four-room or larger apartments increased somewhat less.

In Tartu and Pärnu, apartment sales offerings also increased in the first half, although at a more modest pace. In Tartu, the number of apartments that passed through the portal in one month increased by 30%, and in Pärnu by 27%. In these cities as well, the most apartments for sale are two- and three-room apartments.

Although the number of offerings has increased, approximately one-quarter fewer real estate sales transactions were completed in the first half of this year compared to the first half of the previous year.

According to Kinnisvara24's CEO Urmas Uibomäe, Estonia's most active real estate market is in the capital this year as well. "We are seeing a dramatic growth in sales offerings in Tallinn, but compared to last year, Tartu and Pärnu have also seen a flood of new offerings come to the market. Although the desire to sell apartments is increasing, purchase transactions are being made at a modest pace." Uibomäe pointed out that compared to the first half of 2022, the number of apartment purchase transactions in Tallinn fell by an average of 25% per month. "A similar situation exists in Tartu, but the decline in Pärnu was even greater – over 50%. Since transaction activity is low, the inventory of apartments is growing," explained the portal's CEO.

The average size of apartments offered for sale has not changed significantly: in Tallinn and Tartu, apartments averaging 60 square meters are sold, and in Pärnu, slightly smaller ones, averaging 57 square meters.

Although the transaction market shows that demand has fallen, sellers are not willing to reduce prices. In the first half of 2023, the average price per square meter of apartment offerings in Tallinn was 3,365 euros, in Tartu 2,537 euros, and in Pärnu 2,630 euros.

According to Uibomäe, transactions are concluded at somewhat lower prices. "The largest increase in transaction prices was in Tartu, where the average transaction price per square meter in the first half of this year was 2,486 euros. The price per square meter increased by 16% year-over-year. When comparing the offering price to the transaction price, it can be seen that there is very little room for negotiation in Tartu and discounts were given only 2%."

In Pärnu, the transaction price increased by 13% year-over-year to 2,121 euros. "In the summer capital, the difference between the offering price and the actual transaction price is approximately one-fifth," said Uibomäe.

In Tallinn, the increase in the actual transaction price was more modest – the price per square meter of sold apartments increased by 8% year-over-year and was 3,035 euros in the first half of this year. Uibomäe pointed out that in the capital, sales transactions were concluded at a price per square meter approximately one-tenth lower than in the average sales listing.

According to Urmas Uibomäe's assessment, the rise in apartment sales offerings and the average price per square meter are behind the increasing cost of living conditions. "People have developed a desire to sell their real estate profitably to increase their savings and alleviate daily financial hardship. Multiple property owners may find it more beneficial to dispose of one property under conditions of increased loan interest rates and general increase in the cost of living, in order to reduce monthly loan payments."