Estonia's association of real estate companies (EKFL) say that the increase in unemployment and reduction in income will bring about a decrease in the price of residential properties but has warned of creditors initiating hostile takeovers.
"We can already see that people's income is decreasing significantly with unemployment climbing. This reduces the confidence and readiness in purchasing new homes. The lower number of deals will result in a sudden liquidity crisis that will in turn bring about lower housing prices. The experience of 2008-10 has shown that as a result of price drops, people will be forced to give up their homes for an unreasonably low price," The managing directors of Estonia's association of real estate companies, EKFL, Tõnis Rüütel and Gert Jostov say.
In a letter sent to the Ministry of Economic Affairs and Communications (MKM), they warned of creditors initiating hostile takeovers, ERR's online news in Estonian reports.
"We ask the ministry to develop measures that will protect property owners from hostile takeovers in a situation where asset values are decreasing. The recovery of the real estate sector depends on the recovery of the rest of the economy and therefore it is not reasonable to expect that property owners could rectify infringment of the law unilaterally."
"Existing regulations that concern creditors need to be relaxed together with the terms of the loan agreements in order to avoid mass fire sales. Only this can ensure that property owners can eliminate debts."
The heads of EKFL pointed out that if the gross domestic product will drop by 10 percent in 2020, the number of real estate transactions will decrease by at least 20-25 percent and the prices will drop by at least 15-20 percent.
Editor: Anders Nõmm