Real Estate Expert: The Boom Is in People's Heads, Transaction Numbers and Prices Don't Actually Confirm It

Real estate expert: the boom is in people's heads, transaction numbers and prices don't actually confirm it

According to Martin Vahter, head of 1Partner Real Estate, there has been a lot of talk about a real estate boom in recent months, but transaction numbers and prices don't show it. According to Land Board statistics, over the past five years, fewer transactions were made only last year than in May of this year.

According to Martin Vahter, 1260 real estate transactions were made in Tallinn in May, and this is a completely normal month. "A few years ago, 1400 and even almost 1500 transactions were made during the same period per month," said Vahter.

According to Martin Vahter, Tallinn apartment price statistics also do not show overheating. "This year, the capital's apartment per square meter cost on average 6.6 percent more than last year, and this is a completely normal price increase. An alarm signal is a price increase of more than 10 percent, and there have been several such years over the past decade. Therefore, this spring is in no way special from a statistical perspective," said Vahter, adding that the price increase by the end of the year should also remain below ten percent.

"The current feeling of a boom is rather emotional, because no one thought that the real estate market could do so well during a crisis; most analysts expected a decline a year ago. Meanwhile, people accumulated a lot of free money in their accounts and there were few ways to spend it. But that doesn't mean you can ask 20 percent more money for a panel apartment in a suburb," said Vahter.

According to the real estate expert, the risk of overheating is not over. "Summer will be calm, people are resting, traveling, and doing other things. At the same time, economic growth and inflation remain high, and a large amount of pension money will come in the fall," said Vahter.

"I recommend keeping emotions low, because the current shortage won't last forever. If you can't find a suitable home right away, then renting is affordable and it's worth considering that option. If the world opens up more permanently, then people will have more choices and demand should decrease. Also, ongoing new developments will gradually be completed," added Vahter.