Taavi Rõivas acknowledges Tallinn has a poor rental housing market, but has again expressed reservations regarding state-developed projects.
It comes in response to an idea voiced by Economy Minister Urve Palo (Soc Dem) several weeks ago.
Palo advocated the idea today again at the Cabinet press conference, citing a study that showed the market was not working as well as in other, western European countries.
Supply was not keeping up with demand and prices were rising, Rõivas admitted.
"The question is about solutions above all - can private business interests meet demand and will we imagine the state taking a clearing and ordaining that the next bedroom community will arise here and heroically tackle the problem?" Rõivas (Reform) said. "I don't believe in state capitalism. The market does a better job at addressing this problem."
Finance MInister Jürgen Ligi (Reform) said there were pros and cons. "I personally witnessed the process of renting out one apartment and it did seem that the market is not functioning at all." But Ligi said the interests of apartment owners should be considered, as the state would in effect be using their taxpayer contributions to compete with them, adding that intervention was acceptable in certain sectors.
Palo says the issue should be in the platform of the next government and it is not an issue for the current government.