War Did Not Slow the Real Estate Market: New Price Records Were Set Across Estonia in March
In Tallinn, Tartu, and Pärnu, new apartment price per square meter records were set for the second consecutive month. In March, the median price per square meter of apartments in Tallinn rose to 2604, in Tartu to 1904, and in Pärnu to 1853 euros per square meter, analyzes Estonia's largest real estate agency Uus Maa based on Land Board statistics.
According to Igor Habal, analyst at Uus Maa Real Estate Agency, March results in the apartment market were outstandingly good thanks to contracts concluded in previous months. "Based on preliminary data, 2272 apartment sales transactions were concluded in Estonia in March, which is admittedly a few percent less than the same period last year, but considerably more than the 1800+ transactions in January-February this year," said Habal.
The median price per square meter of Tallinn apartments grew by 1.7% month-on-month and by more than 20% year-on-year to 2604 euros. The median price of Tartu apartments rose by 0.5% month-on-month and by 8.4% year-on-year to 1904 euros. "Thanks to a larger volume of new developments, the median price of Pärnu apartments has grown year-on-year by an incredible 55%," added Habal.
"In the big picture, the number of real estate purchase-sale transactions in Estonia has fallen in recent months due to lower consumer confidence and risks to money availability. The number of people selling their property to maintain liquidity has increased, as has the number of offers. For example, the number of apartment offers in Tallinn has risen from 2000 at the beginning of the year to 2200-2300 in March-April. Due to the risk of rising interest rates, the number of loan refinancings has also increased dramatically," said Habal.
"The growth in sales offers and declining activity would normally indicate an impending price decline, but in a situation where many new apartments have been braked due to rising raw material costs and there are no visible threatening problems in the macroeconomy, a price decline may not materialize in the market," said Habal.
"While the real estate sales market is largely stable, the rental market experienced unprecedented large and rapid changes in March due to the Russia-Ukraine war. By the end of March, over 25,000 refugees had arrived in Estonia, and strong demand quickly reduced the number of rental offers. While in early February there was an oversupply of 1300 rental apartments in Tallinn, by early April this number had fallen to 800. The 40% decline in offers over two months has already brought a noticeable increase in rental prices," added Uus Maa Real Estate Agency analyst.
