Today's Real Estate Buyer – Investor, Planner, or Saver?

In the real estate market, in addition to price, building energy ratings and the potential future value of the property increasingly influence purchasing decisions. The most preferred are two-room apartments of around 50 square meters and three-room apartments of around 75 square meters. According to Agur Tammistu, senior consultant at Domus Real Estate, real estate buyers can be broadly divided into three groups. "The main types of buyers are price-sensitive buyers, investors, and future-oriented buyers, among whom are people of different ages from all walks of life," said Tammistu.

Price-sensitive buyer

Tammistu explained that price-sensitive buyers look for real estate primarily based on current opportunities. "The main criterion for real estate purchase for them is the price limit, which is why the most preferred objects are new developments on the outskirts of the city. New developments are preferred compared to older apartments due to their lower overhead costs." Price-sensitive buyers are primarily guided by current opportunities and mainly by the amount of their own financing, which often sets a limit on obtaining a bank loan.

Future-oriented buyer

The future-oriented buyer chooses a home for a longer period and highly values both the existing infrastructure and planned developments. According to Tammistu, important factors in property selection are also its possible future value and the opportunity to profitably realize the property when life circumstances change. "For such buyers, proximity to the city center or very good connection to the city center is important, and they also highly value distinctive planning and possible additional benefits, such as parking arrangements, proximity to sports facilities or parks," said Tammistu. Often in this group of buyers are young families who are already thinking ahead about family planning and buy larger living space to avoid the hassle associated with changing homes in the future.

Investor-type buyer

The investor-type buyer goes hand in hand with clear profitability calculations – primarily based on rental yield or its prospective rate. As Agur Tammistu explained, the investor is not so concerned with the current condition of the real estate, since it is possible to create very attractive apartments for younger generations even with modest means through renovation. "Therefore, properties are purchased whose rental yield would be good enough to provide the landlord with regular income. Previously, properties were also quickly renovated and then sold at a higher price, but this trend has clearly slowed down, since there are fewer such real estate objects on the market," said Tammistu.

Trends in the real estate market

The building's energy rating is being looked at increasingly. However, it is worth mentioning that while there may not be significant cost differences between energy classes A and B, the price level is higher for properties with A energy class, because the real estate developer has to incur more costs in this regard.

In residential areas, generational change is taking place, where young people just starting independent life are purchasing their first home or have inherited property in the area from their parents or grandparents and are renting it out. The reason lies in the fact that such properties are often used as additional collateral in a bank, and since most of such objects have been privatized after EVP programs, renting out an apartment also helps cover the costs of a new loan. The older generation, on the other hand, sells their oversized real estate to move to a smaller and more energy-efficient space.

Often in real estate acquisition, however, the deciding word in property selection belongs to the bank itself, as it takes into account the client's solvency, the existence of a usage permit, and the availability of own financing. Kristjan Jasinski, head of partnerships at Luminor, always encourages all clients to contact the bank to clarify their borrowing capacity and receive helpful advice. "For example, we can give advice on how to improve your borrowing capacity or which objects to include in your selection. The bank is happy to be a partner for clients, as buying a home is one of the most important financial decisions made," said Jasinski. According to him, you don't even have to leave home today to get loan advice; you just need to arrange a consultation by phone. "Bank employees are happy to share their experience and good advice also during, for example, web meetings."