Apartment prices not fallen compared to pre-coronavirus period

Apartment buildings in Tallinn.
Apartment buildings in Tallinn. Source: Siim Lõvi/ERR

Apartment prices have not dropped significantly and are almost the same as before the coronavirus crisis. More apartments were purchased in June 2020 than June 2019 and a price drop is not expected in the future.

In June, almost 7 percent more apartments were sold in Estonia than in May. Although the average price per square meter of apartments has remained at the same level, buying activity has increased compared to the previous month, reported ETV's "Aktuaalne kaamera" on Wednesday.

Martin Vahter, CEO of 1Partner Kinnisvara, said: "The fall in prices also takes time, and this crisis situation was very short in terms of falling prices."

Vahter believes there was freezing in the real estate market, rather than a fall where no transactions were made.

The current situation is not comparable to the economic crisis of 2008. If in 2008, the main problem was lack of money, now there is money, but people do not want to sell, Vahter said.

"Currently, the condition of the banks is good, people have bought out their assets. The decline in the number of transactions shows people are not willing to just sell cheaper. If it lasts a long time now, of course, there will actually be a fall in prices."

Real estate analyst Tõnu Toompark said it is important to monitor the number of transactions, not the price increase or decrease. Looking at the sales prices of apartments, there is a 10 percent price increase compared to the previous year. But these deals may have been agreed up to a year ago when the economy was in a different state.

"Transactions for new apartments, which are almost always more expensive than the market average, misleadingly show us that real estate seems to continue to rise. But, there is already some decline in real estate prices," Toompark said.

The real moment of apartment sales prices will probably come in the autumn, when loan holidays will end. However, the impact on the real estate market has to be delayed and forecasts for the future are still difficult to make.


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Editor: Helen Wright

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