"We have returned to a situation in which the supply of apartments costing more than €500,000 clearly outnumbers the demand. With an average of 10 sales per month in this price range this year, the present "stock surplus" is exceeding a year's worth. This has stretched the selling time to more than six months, which is rather usual for the sale of luxury apartments," said Meelis Ränk, the managing director of the real estate property service 1Partner Kinnisvara.

Many high-priced apartments currently on the market, Ränk added, are clearly overpriced due in part to the price increase of the previous year.

"My guess is that a third will undergo a price correction. This should not be confused with usual price reductions — it is correcting inflated pricing," Ränk said.

He added that the market is nevertheless active: "In Tallinn, 70 apartments worth more than  €500,000 were sold last year and 81 have already been sold in the first eight months of this year."

The initial down payment for a €500,000 apartment would be about €100,000 and the loan would need to cover €400,000, which at current interest rates translates to a €2,000 monthly payment.

"The number of people who can afford to purchase homes costing more than €500,000 is not increasing very fast. Moreover, the majority of people whose salary permits to do so have already bought a nice property," Ränk explained the lengthening of the sales periods.

There are also 16 apartments for sale in Tallinn for more than €1 million. "For these very exclusive residences, the sales period can be even longer, and it's no surprise that when an agreement is reached, the asking price drops by the cost of a new luxury car or a smaller apartment."

--

Follow ERR News on Facebook and Twitter and never miss an update!