Estonian house prices continue to rise despite lower demand and economic difficulties.
Despite lower demand and economic difficulties, house prices in Estonia continue to rise. This is the trend noted by Global Property Guide analysts in their latest report. According to the study, the average cost per square meter of housing in Tallinn, the capital of Estonia, has increased by 5.2% over the past year. This is slightly lower than the growth rate of previous years, but still well above inflation.
Experts attribute this phenomenon to several factors. First, the limited supply of new buildings in the most sought-after areas of the city creates a shortage of quality housing. Secondly, low interest rates on mortgage loans continue to stimulate demand from local buyers.
However, analysts warn that this situation may change in the near future. The economic downturn caused by the pandemic coronavirus, may lead to a decrease in purchasing power of the population and, as a consequence, the correction of prices in the real estate market. The luxury housing segment, which relies heavily on foreign investors, may be particularly vulnerable. Restrictions on international travel and general economic uncertainty may lead to reduced interest from foreign buyers.
Nevertheless, experts note that the Estonian real estate market remains one of the most stable in Eastern Europe. A strong legal system, transparent transactions and relatively high rental yields continue to attract investors despite the current economic challenges. Government measures to support the economy, including programs to stimulate construction and renovation of housing, can also play a positive role in maintaining the stability of the real estate market.
Analysts recommend potential buyers and investors to closely monitor the development of the economic situation in the country and the world before making decisions about purchasing real estate in Estonia. Despite the current price growth, the possibility of market adjustments in the medium term cannot be ruled out.
