Real Estate Market Boils Over Due to Mandatory Building Renovation Plan

The beginning-of-year silence in the real estate market has been replaced by spring activity. Although the Euribor remains topic number one, the European Union's building renovation plan has also generated great excitement among clients.

Although the plan to renovate all older residential buildings, which according to the idea should bring them to at least energy class D, is still quite raw and major disputes lie ahead, it has already caused a small storm in a teacup in the real estate market. Thus, clients began to inquire much more about the energy classes of buildings and showed interest in what the corresponding designation is for their own home or whether it even exists at all.

It will not yet have a broader and more real impact on the real estate market, because as mentioned, the whole matter is still in its early stages and according to specialists, it is also unrealistic in Estonia's case. However, it is positive that people have begun to show more interest in the topic and it can be assumed that housing associations will begin to investigate building renovation options even more actively.

Price levels rather in decline

Looking at price dynamics, we see more stagnation or declines. Prices are falling especially in the case of apartments requiring repairs and those in average condition, while in new developments they are largely quite stable. Thus, price decline as a whole is not significant, but using the language of professionals – a correction is already taking place. This is certainly also aided by uncertainty with Euribor, as the European Central Bank has "threatened" with new interest rate hikes.

In Tallinn, 829 apartments changed hands in March (619 in February), with a median price per square meter of 2766 euros. Compared to February, the price level fell by 0.3%, while year-on-year it rose by 6.2%.

The number of transactions in Tartu also increased compared to February. Thus, 185 apartments were sold in March (92 in February), with a median price per square meter of 2475 euros. While compared to February the price level fell by 5.8%, year-on-year it rose by 26.8%.

March in Pärnu was quieter than February in terms of apartment sales. Thus, 77 apartments were sold (101 in February), with a median price per square meter of 1891 euros. Month-on-month, the price level fell by 10.9%, while year-on-year it rose by 7.3%.

In Narva, 92 apartments were sold during March (50 in February) and the median average price per square meter came to 596 euros. While month-on-month the price level rose by 11.4%, year-on-year it rose by 29%. Behind the significant price increase is a higher than usual sale of small apartments, whose price per square meter is always also higher.