The Secondary Market Apartment Price Level Has Stabilized

In June, 804 transactions took place with Tallinn apartments, with an average price per square meter of 3,191 euros and a median price of 3,097 euros. Compared to May, transaction activity decreased by 15%, with changes in average price per square meter remaining within one percent.

"Although we saw a decline in transaction activity in all segments of the capital's real estate market in the second half of last year and the first months of this year, it now appears that the previous activity has more or less recovered, especially in the secondary market apartments. Therefore, a new price level is starting to stabilize in this market segment," commented Martin Vahter on June developments in the real estate market.

Although statistics show the average price level holding steady and even slight growth, this is mainly caused by reduced transaction activity in new developments and the realization of previous higher-priced contractual agreements into property rights agreements.

Due to high loan interest rates caused by high Euribor, rental apartment investors have practically completely left the new developments apartment market. For returns exceeding loan interest to be restored, either prices in new developments would need to fall or rents would need to rise. Likely both scenarios will be realized in some form.

"Developers are not inclined to lower prices sufficiently to restore the previous transaction activity of need-based buyers, so there is a kind of mutual standoff, to see whose nerves give out first. Similar to the secondary market, new transactions in new developments are taking place mainly with assets in the more favorable price range. However, there is also some noticeable increase in interest in apartments in higher price ranges," said Vahter.

"People have gotten used to Euribor by now, people have jobs and banks are lending," described Vahter and added that although analysts believe Euribor could exceed the 4% mark in the coming months, the breaking point where the interest rate increase will stop is no longer far off.

The total value of real estate sales and purchase transactions in the capital was approximately 168 million euros in June, or 32% less than in May and 20% less than in June 2022.

The most expensive Tallinn apartment was sold in June for 1,834,000 euros. In the capital, 16 developed residential land properties were also sold in the past month.

1Partner Real Estate publishes the latest real estate transaction market overview at the beginning of each month. On 1Partner Real Estate's website you can find a price comparison graph of Tallinn real estate transactions, from which you can find a simple overview of monthly changes in the cost per unit of area, also broken down by city districts.

1Partner is the leading real estate group in the Baltic countries, with offices in Tallinn, Tartu, Riga, and Vilnius. The 1Partner group provides real estate brokerage, valuation, construction, development, management, and investment management services.