Real Estate Market Begins to Move Apartments That Have Been Vacant for Years
According to Igor Habal, a member of the management board of Uus Maa, Estonia's largest real estate agency, the recent months have been unusually euphoric in the Tallinn real estate market, and apartments have been sold even in developments that had been stalled for several years.
"Although the economic downturn continues into the 10th quarter and purchasing power is recovering slowly, in recent months the number of transactions in both new and secondary market apartments has grown by up to 20%. October's nearly 800 apartment transactions per month are already reminiscent of boom times. The main reason for the growth in transaction numbers is more favorable and accessible lending – people have been postponing decisions for a long time, and markets are waiting for euribor to fall below 2% by next summer. As a result, in a couple of Tallinn's newer towers and developments where no transactions had been made for a long time, 5-6 apartments have started moving," said Habal.
"In the suburbs, there is greater interest in new apartments in the 3500-4000 price range per square meter, and in municipalities near the capital in the 3000–3500 euro range," added Habal.
"The second reason transactions have started moving is that sellers who have been maintaining high prices for several years can no longer afford to wait and are meeting buyers halfway. For buyers, the picture is also clearer – they can see that a building completed a couple of years ago is functioning and what its actual monthly utilities costs are," explained Habal.
"There are still anomalies in the market – particularly striking is that in Mustamäe, for example, as many secondary market transactions were made in October as in Lasnamäe, which is extraordinary given that Mustamäe has about 40% lower population. The main reason for this is the lack of new developments, so the Mustamäe secondary market is particularly hot, while prices in both city districts have still not risen. In the so-called hills, newer apartments are also preferred, but the selection is rather small, so the market for quite old panel buildings is also rising," added the Uus Maa management board member.
"In the big picture, there are more signs that the real estate market situation will improve slightly next year rather than stay the same or worsen. General economic indicators predict a slight rise in the real estate market for next year, but probably not at the pace of recent months. The sharp growth in October and November transactions was rather a slightly false-positive signal. In the new year, consumers will be greeted by tax and price increases that will do their work," added Habal.
