The Main Concern for Home Buyers Has Become Rising Euribor

The real estate market remained quiet in November as well. The biggest concern for buyers has become the growing euribor.

While in anticipation of autumn, high inflation and uncertainty about energy prices had dampened people's confidence, now that at least electricity prices have become clear, the increasingly growing euribor has emerged as the biggest dampener of purchasing activity. Of course, other negative factors have not disappeared either, such as economic recession, continuously rising food basket prices, and general uncertainty caused by war and its direct and indirect effects.

We are heading towards a quiet winter and everyone is waiting for spring, when according to forecasts, the bottom of the economic recession should be reached or surpassed and there should be a more tangible solution to the energy crisis.

The secondary market becomes primary

The new development market, losing buyers due to general uncertainty and high construction costs, will take a pause for some time. Several large and smaller developers have signaled a halt to construction plans.

This brings focus to the secondary market, where reasonably priced apartments in both older and newer buildings are popular. However, uncertainty and increased supply still affect this segment, so it is worth remaining flexible in price expectations and making discounts when necessary.

The same applies to the rental market, where the commodity is an apartment with reasonable ancillary costs and rental prices in the rather cheaper category.

Tallinn market declined

In November, 664 apartments were sold in Tallinn (697 in October), with an average median price per square meter of 2,791 euros per square meter. By the way, last November, at the height of the investment boom, 1,103 apartments changed hands. Compared to October, apartment price levels fell 2.8%, while compared to last year they still rose 19.5%.

More active completion and handover of new apartments to buyers strongly influenced Tartu market results in November. Thus, 185 apartments were sold (113 in October), with an average median price per square meter of 2,394 euros. The price increased 9.7% month-on-month and as much as 42.3% year-on-year.

New apartments also played a role in the Pärnu real estate market and for the second consecutive month. In November, 77 apartments were sold in the summer capital (74 in October) and the median price per square meter exceeded the magical 2,000 euro threshold (2,280). While price levels rose 18.2% month-on-month, they rose 45.1% year-on-year.

The Narva real estate market also showed growth in November. 53 apartments were sold (47 in October), with an average median price per square meter of 542 euros. Compared to October, price levels increased 9.9% and year-on-year 12%.

Similar to Tallinn, the number of apartments sold in the other mentioned cities has also declined significantly compared to a year ago.

Article author: Risto Vähi, Uus Maa Real Estate Bureau analyst