Rent prices dropped by 25 percent during pandemic ({{contentCtrl.commentsTotal}})

TV Tower BASE Boogie 2020.
TV Tower BASE Boogie 2020. Source: Siim Lõvi/ERR

The economic crisis caused by the coronavirus has not changed real estate sale prices in Estonia noticeably, but a 10-25 percent decrease in rent prices can be seen, mostly attributed to apartments being freed due to the pandemic.

Sirli Nurm, Tallinn broker at Lahe Kinnisvara, said there are fewer renters in Tallinn, which is affecting the market.

Nurm said: "There is a possibility to haggle with prices currently, because there are fewer renters than apartments available, also because Airbnb apartments have become available on the market. Foreign workers and students are also missing, which lessens the number of renters even further."

She added many apartments for rent are currently empty altogether and prices are 20 percent lower than prior to the pandemic.

Nurm said: "I have a beautiful two-room apartment in Mustamäe in my portfolio that I have previously rented out at €530 a month, utilities not included. After the emergency situation, I priced it at €450 because there was only one renter interested and they made an offer."

Kristjan Kimmel, marketing manager at 1Partner, said the price drop can also be felt on the rental market. "Many Airbnb apartments and other guest apartments have found long-term renters and prices have fallen because of that. Depending on the region, the drop falls in between 10-25 percent."

Kimmel added: "Regarding buying and selling, there is no noticeable price drop to be seen. It is important to note that this is not an economic crisis, but rather a healthcare crisis that caused parts of the economic sector to close, simply put."

Siim Kabel, head of the Tallinn housing department of Kaanon Kinnisvara, said the district with the most apartments available is Kesklinn, where the majority of the guest apartment market fell off.

He noted: "Additionally, Kesklinn is being affected by people, whose income has decreased, moving out to cheaper surrounding districts."

According to Kabel, the situation of the market can be correctly assessed in autumn. "Even now, we can see an increase in demand compared to April and May, but demand is not even close to what it was a year ago. The start of the schoolyear is always a wild time for the rental market. In addition to students, there are new workers joining the market who took time off in the summer to rest and are now headed for the job market. My prediction is that the market will recover up to 75 percent, compared to last year."

Tartu's rental market is expecting the arrival of students

Tero Villik, Tartu broker of Lahe Kinnisvara, noted tenants are aware of the market situation, regardless of them being students or families.

He noted: "Incomes have taken a hit and prices have to be decreased, whether it be the rental or the purchase-sale market."

Villik said prior to the pandemic, he was able to rent out a house and a one-room apartment with a good price. Workers in the service sector lost their jobs, however, and in less than a month, new tenants arrived on considerably lower prices.

Margus Kelk, head of brokerage at 1Partner Tartu, said with autumn closing in, there are more queries about apartments daily and supply is decreasing.

Kelk said: "One or two-room apartments are still the most liquid with prices up to €350. The crisis' effect on rental prices has been minimal, close to 10 percent, depending on the price range of the apartment."

The amount of apartments available has increased by a quarter, compared to the first quarter of 2020.

Annemai Tuvike, Tartu broker at Kaanon Kinnisvara, confirms the market has been noticeably calmer during the summer than in the last years.

Tuvike said: "When normally, some apartments during the period were rented out in a day or even hours, it does not get that busy now."

She added that clients are becoming more price-sensitive, which means the ratio between quality and price needs to be adequate.

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Editor: Kristjan Kallaste

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