Data from Statistics Estonia shows that the prices of apartments in Estonia grew 16.6 percent year-on-year in the third quarter of 2021. The prices of houses jumped 19.5 percent in the same period, ETV's daily affairs show "Aktuaalne kaamera" reported on Wednesday.

"Prices have gotten higher and have done so since the start of the year. There is no end in sight currently. One factor is certainly that there are few objects, the real estate market as gotten bare and the number of offers is decreased. Another factor is an expectation of inflation - if I do not buy today, who knows what will happen tomorrow?" said real estate agency Raid & Ko broker Silver Sellik.

Prices are naturally dictated by Tallinn, where the average home loan this year has been €119,000, Swedbank said. Average home loans in Ida-Viru County were at €39,000. But wage growth of the capital city's residents increased less than real estate prices, which means lower-income people will find it increasingly harder to acquire a home.

The average incomes of borrowers this year was €2,600, but the number of loans taken in the income group of €1,000-€1,500 dropped by 3 percent.

"More people have moved out of the €1,500 income group and people with higher incomes than €3,000 took out the most loans. There is an important nuance here: these groups include people who take out a loan alone or with someone else," said Swedbank home loan department head Anne Pärgma.

Data from Bank of Estonia shows that the increase in real estate prices before the coronavirus pandemic went hand-in-hand with wage increases, meaning the purchasing power of real estate was relatively stable.

"Real estate prices have grown faster than incomes in the last year, which could mean affordability has worsened. On the other side of the coin, most people use real estate loans and competition on the banking market has increased somewhat, leading home loan conditions to ease up some, interest rates have gone down a little," central bank economist Taavi Raudsaar said.

Real estate price inflation is likely to remain high next year. "We are forecasting wages to grow 8 percent, but we know that there is a modest amount of real estate available, which could mean that real estate prices will grow faster than wages, remaining around 10 percent," Raudsaar noted.

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