Rising interest rates and general uncertainty are likely to lead to a decline in real estate prices in the near future, experts are predicting. Rising prices stopped several months ago.
More and more experts are forecasting a drop in prices, Wednesday's "Aktuaalne kaamera" (AK) reported.
Real estate entrepreneur Viljar Arakas said on Monday that he would hold off between six and 12 months if he were to buy a home in the current situation.
Expert Tõnu Toompark told AK prices are falling due to a combination of factors.
"A price drop in the housing market is more likely [now] than in the last 10 years. We have a whole range of risk factors. The worst of them is the energy prices, which will already affect us in September, but besides that, the risk of economic recession and possible problems for the labor market stemming from there," he said.
Toompark said property prices have already stopped rising which shows buyers' interests are waning.
"New developments are already available now, buyers' interest has fallen, which is again a factor that could indicate a future drop in prices, if buyers do not want to buy, but sellers have property to offer. If at the beginning of the year there was a clear deficit of offers on the market, then you cannot speak about this in July and August. Buyers' interest in the market for new apartments has dropped several times," said Toompark.
On the other hand, managing director of real estate agency 1Partner Martin Vaher believes there is still a shortage of apartments in Tallinn. A sharp drop in the number of transactions would signal a drop, he said.
"Indeed, price growth has slowed down today, but this slowdown already took place in June, when the price per square meter did not increase on month. It has been fluctuating up and down for three or four months already," Vaher told AK.
There has not been a fall in the number of people taking out mortgages despite the rise of Euribor rate which makes repayments more expensive.
"People are paying more attention to what the monthly payment of their loan will be, they weigh it very carefully. The price has not changed in recent months. The average home loan margin remains in the order of 1.85. Compared to last year, it has decreased a little," said Swedbank's head of housing loans Anne Pärgma.
Editor: Helen Wright