New Land Forecast: Next Year Will See Growth in Both Real Estate Transaction Volume and Prices
According to Argo Pillesson, a board member of Estonia's largest real estate office and head of the valuation department, better lending conditions and a reviving economy are expected to bring both growth in transaction numbers and price increases in 2026. Faster price growth is predicted for older apartments.
According to Argo Pillesson, the volume of residential real estate transactions has clearly grown during the current year and reached a long-term average level. "Due to turbulent times and high loan interest rates, people have been in a waiting position for a long time – there was consideration and planning, and now decisions are being made. We cannot talk about a boom, but there is optimism to be felt and growth can be predicted for the market in the coming year," said Pillesson.
"The main engine of the real estate market is the improved financing environment. The market has adapted to the current level. Monthly loan payments for an average loan have fallen by about a hundred euros compared to the peak, and salaries are catching up with inflation – people are beginning to have some breathing room. From next year, the tax bracket also disappears, which leaves people with more money in hand. The much-discussed consumer confidence indicator has been moving upward in recent months, and according to economic forecasts, we are at the beginning of a new wave of growth cycle," said Pillesson.
"In terms of real estate purchasing power, after an interim decline, we have reached the level before the previous boom, which means that for one median salary you can get 0.65 square meters of a Tallinn apartment. The loan affordability index is also moving close to the historical average in light of the euribor decline and continued median wage growth. This is a time that will later be looked back upon as a favorable moment for acquiring real estate," said Pillesson.
"Statistics show that during the current year, the number of apartment transactions both in Tallinn and across Estonia has made a decent jump, and we are approaching the average of the last ten years. Estonians trust real estate, and I see some room for growth here as well in the coming year given the improving economic environment. Over the last two years, real estate prices have not risen, but in the wind of increased transaction activity and persistently high inflation, price growth will also be seen in 2026, which can be predicted to be close to 5% in terms of the apartment market," noted Pillesson.
"In 2026, price growth will be driven by the secondary market. Several signs suggest that in the secondary market apartment segment, price growth exceeding 5% may be seen in the coming year. The sale of new apartments is currently still at a low point with some exceptions, and changes in this area can be expected when older real estate prices approach new ones. Currently, this difference is sometimes even 40%. For new real estate to be attractive, the difference with older properties should rather be around 25-30 percent. So there is considerable growth potential, especially when it comes to older apartments," said Pillesson.
According to Uus Maa board member, the sale of ready-made new developments depends on the specific project. "Wealthy buyers are present in the market, but they also have more specific requirements. Currently there is a large selection of new developments, which means that successful sales require the product offered to stand out positively. A good example is the Mustamäe Manhattan high-rise project. Pre-sales are going successfully because it is one of the first of its kind where a residential building with high views is built together with a shopping and leisure center," added Pillesson.
