"There has not been such a high amount of deals made in 12 years. In November last year, we were six deals under 1,000, in March, there were 1,004 deals, 1,020 in April. We'll see if it keeps growing in this pace," real estate analyst Tõnu Toompark told ETV's "Esimene stuudio" on Wednesday.

A reason why real estate prices are continuing to grow and only more expensive apartments are being swooped up, is that there are more buyers than sellers. Furthermore, banks are offering loans at quite reasonable interest rates. Homebuyers make up 80 percent of all deals with 20 percent buying real estate for rental investments. Foreign capital is also making investments into Estonia's real estate market.

A year ago, when the global coronavirus pandemic hit Estonia, real estate forecasts were rather pessimistic. The main thought was that prices could fall up to 15 percent, but month-by-month and quarter-by-quarter, forecasts turned a more optimistic side. Still, the market was at a standstill in wait of development and that period left a slight vacuum, which is still being filled. That is to go with money-printing in Europe and inflation, both bringing in available money to the market.

"There was a danger of deficit," Toompark said. He emphasized that there is actually no shortage of apartments available. In addition to some 1,200 new apartments, there are still older living spaces for sale, as well.

Toompark did not agree with show host Johannes Tralla's estimation of real estate prices continuing to grow. He pointed to 2009, when the Great Recession arrived - real estate prices dropped 50 percent from high prices in 2007.

Toompark noted that a person earning average wage could buy a two-room apartment in a Soviet-era building in Mustamäe currently. But if two people earning average wages live together, newer and better options are available. "An average wage is suitable for the real estate market but only a third make average wage or higher," the analyst said.

He admitted that Tallinn is quite a uniform area - both price trends and the number of made deals is moving upwards in all city districts. The same can be said for the counties in Tallinn's vicinity.

Toompark said that real estate sales are relatively simple at this point. The direction is shown by the number of made deals. If that number continues to peak, there is still space to increase prices.

The analyst noted that there is a sense of emotionality on the market, but there are no manifestations of a crisis that would forecast a collapse. "There is a certain imbalance on the real estate market, but there is no reason to collapse. I do not estimate that prices crash down in the next year, year and a half," Toompark said.

He pointed out that real estate value has increased by 10 percent from April 2020. In contrast, the boom in 2005-2006 saw the value of real estate go up several dozen percent a year.

At the same time, Toompark said it is important to keep an eye on overall global trends: If the economies of Greece, Italy and France collapse again if interest rates were to go up. This is a reason for current real estate loan-takers to consider that the six-month Euribor can grow considerably. In 2008, the Euribor rate was 5.3 percent.

Still, he does not rate the likelihood of this too highly, because the central bank's requirements to borrowers should be rather effective: no more than 50 percent of the person's income can be used to repay loans, the duration of the loan cannot exceed 30 years and the loan cannot be granted for more than 85 percent of the property's value. Commercial bank loan conditions tend to be even more strict.

"The balance of overdue loans has even fallen throughout the coronavirus period," Toompark said. "There is nothing dramatic or extreme yet."

Yet, Estonia is likely to follow the example of many western European countries: fewer and fewer young people can afford to own real estate in the capital city and renting will become more and more inevitable.

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