Young People Prefer Apartments from the Secondary Market, but Houses as New

Swedbank's home loan statistics show that the housing choices of young people under 30 years old have changed somewhat over the past year. While when buying apartments, secondary market apartments are increasingly preferred over new developments, the trend for houses is the opposite – newer or fully renovated homes are being chosen more and more frequently.

„With apartments, the change has occurred primarily at the expense of new developments. While previously, new apartments made up approximately one third of all transactions by young people, last year their share fell to 24%," said Anne Pärgma, Head of Housing Loans at Swedbank.

Apartments in buildings built before 2000 continue to be purchased the most. The change in this respect has been minimal and the share of transactions remained around 40%. However, the share of apartments completed between 2000–2023 has increased the most, reaching 36% according to the latest data.

According to Pärgma, this reveals a clear shift towards newer, but not brand new homes. „This shows that there is more selection on the secondary market, but also more demand. In addition, an apartment that is a few years old or thoroughly renovated often offers young people a better price-to-quality ratio than a completely new home," she explained.

The newer the apartment, the larger the average loan amount: while buying an apartment built before 2000 requires an average loan of around 90,000 euros, for an apartment completed between 2000–2023 approximately 170,000 euros, then for a new development close to 190,000 euros.

Although the loan amounts taken for purchasing new developments continue to be the largest, the year-on-year change has been the smallest. For new developments, the average loan amount for young people has grown by only 5%. Meanwhile, on the secondary market, average loan amounts have grown much faster, depending on the age of the apartment 13–16%.

When buying a house, newer is preferred

The picture is different for houses. Young people are buying far fewer houses built before the millennium and are increasingly choosing houses completed after 2000 or brand new houses.

Houses built before 2000 made up only 17% of young people's house purchases last year. Compared to a year ago, the share of such houses fell by a full 22 percentage points. At the same time, the share of both new and houses built in 2000–2023 has grown, reaching 44% and 39% respectively.

Loan amounts taken for house purchases have grown at a fairly consistent pace across all construction years, increasing by up to 16% year-on-year.

An apartment is bought alone, a house together

Slightly over half of young people under 30 take out a home loan alone. The difference becomes clear when looking at the type of dwelling: while approximately two out of three people buy an apartment alone, only about one in four young people buy a house alone. „This suggests that for young people, buying a house is more often a joint and longer-term decision, and the higher price of houses also plays an important role," explained Pärgma.

While the average loan amount for houses built before 2000 remains around 115,000 euros for young people, for newer houses it is around 233,000 euros. The average loan amount for brand new houses reaches nearly 241,000 euros.

Looking at the overall picture, it is important to note that young people buy far fewer houses than apartments – approximately one house for every four apartments. Taking into account all young people's home loans, the average home loan amount remains at around 140,000 euros and loans are taken for both apartments and houses for an average of 28 years. Taking into account the average loan amount and period, this usually means a monthly loan payment of between 600–700 euros.

A home is purchased where there are jobs

There are no major regional changes and young home buyers continue to concentrate in larger centers. Approximately 60% of homes are purchased in Tallinn or Harjumaa, 20% in Tartumaa and the remaining 20% elsewhere in Estonia.

According to Swedbank's data, young people under 30 make up approximately a quarter of all the bank's home loan clients and their share has gradually increased in recent years.