Real estate market remains growing despite spread of coronavirus

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Apartment house. Source: Siim Lõvi /ERR

When the coronavirus's first wave fizzled out in spring, the real estate market saw demand exceed supply a little, then over the past couple of months, the gap has gotten even larger. This is due to the fact that there weren't as many new developments last year.

Pindi Real Estate analyst Peep Sooman said that the real estate market is currently as active as it was in 2019.

Sooman said that people are making transactions which were postponed when the coronavirus first arrived. "A parallel can be drawn with a water dam where water gathers behind the obstacle, and when it's opened, all the water comes flooding out at once. We had a similar effect in the real estate market

Sooman said that this busier period started in November and has lasted to the present. The otherwise successful real estate market is thus affected by the lack of supply.

"If we talk about the secondary market, then there won't be too many new developments, and an apartment in good condition is hard to find. The deficit is even higher in the case of new developments because, during the last emergency situation, developers slowed down a lot and several projects were postponed. Deriving from that, the number of new developments has fallen to its lowest level," he said.

Realtor Uus Maa analyst Risto Vähi agrees that the demand for real estate exceeds supply. He said that people are getting used to the crisis, and both the support measures and the arrival of vaccines are creating some hope.

"Now, people are looking forward to a time when we are coming out of the crisis and life goes on. Surely, people are afraid that inflation will be higher, and that's why it is more reasonable to invest your money somewhere. We can see the stock exchange is moving upwards and that makes real estate an area to invest your money into," Vähi explained.

Sooman said that another change has arisen from the high demand - the price used to be dictated by the buyer, but now the ball is back in the seller's hands.

Vähi emphasized that even though the real estate market is in a good state, it is not likely to stay so for a long time.

"I myself would say that it is all depending on the support mechanisms, but at the same time, if something were to happen, then it will go totally different. We have people's optimism that we'll go through the crisis together."

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Editor: Roberta Vaino

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