Swedbank: Mortgage Market Moving in Different Directions in the Baltics

Swedbank's first quarter residential loan data shows that Estonia's residential real estate loan market continues to concentrate around Harju County, while in Latvia and Lithuania, the role of other regions is growing. Swedbank issued 67% of new residential loans in Estonia in the first quarter to Harju County.

"While the share of capital city regions decreased slightly in Latvia and Lithuania, and the role of other regions increased, in Estonia the share of Harju County continued to grow. This reflects the fact that economic activity, employment opportunities, and new developments in Estonia remain strongly concentrated in Tallinn and its surroundings," said Anne Pärgma, Head of Residential Lending at Swedbank.

According to Swedbank data, Harju County's share in new residential loan contracts increased by 4 percentage points year-over-year. At the same time, the share of Riga's region in Latvia and Vilnius's region in Lithuania decreased by a couple of percentage points.

According to Swedbank data, the largest average residential loan amount was in Harju County, where it reached 169,000 euros. This was followed by Tartu County with 152,000 euros and Pärnu County with 126,000 euros. At the same time, average loan amounts in the first quarter increased most rapidly year-over-year in Hiiumaa (+49%), Järvamaa (+33%), and Pärnu County (+18%).

"Higher loan amounts continue to concentrate in larger centers, where real estate is more expensive and there are more new developments. Additionally, we see very rapid growth in several smaller counties, which shows that interest in home purchases persists even outside the larger attraction centers," said Pärgma.

The largest decline in average loan amount was in Jõgeva County (-48%), Lääne County (-22%), and Lääne-Viru County (-10%). "For smaller counties, changes should still be viewed with some caution, as a smaller number of transactions may cause average indicators to fluctuate more when comparing quarters and years," she added.

According to the Land Board and Spatial Planning Agency, 4,105 purchase-sale transactions were conducted in Harju County in the first quarter, which was clearly the highest figure among counties. Harju County was followed by Tartu County with 1,016 and Ida-Viru County with 692 transactions. The fewest transactions were conducted in Hiiumaa, where there were 35 in the first quarter.

In the first quarter, apartment price growth also continued. The average price per square meter of new apartments in Tallinn reached 4,583 euros and grew by 8% year-over-year. The average price per square meter of secondary market apartments in Tallinn rose by approximately 6% at the same time. Outside Tallinn, the average price per square meter of new apartments was 3,342 euros and for secondary market apartments 1,352 euros.