The market for buying and selling property, which has calmed as a result of rising interest rates, inflation and challenging economic climate, is slowly recovering, with smaller, previously owned apartments becoming increasingly popular on the market.
Martin Vahter, chief executive officer of the real estate services provider 1Partner, said that the current real estate market is dominated by low-priced assets due to increased Euribor and mortgage repayments.
"An overwhelming number of transactions take place on the secondary market and in the price range of €80,000 to €220,000. "More expensive property, such as homes valued at over €500,000, are sold less frequently," he said.
Vahter explained that in the past, 30 percent of all transactions were of new developments, whereas this percentage is now lower.
He said, however, that new developments benefit from a high energy class, which has a favorable effect on home loan terms. So, depending on the energy label, the margin applied to Euribor may be lower in certain cases.
Anne Pargma, head of housing loans at Swedbank, said the loan terms may also be more favorable when purchasing an older apartment in a renovated building as opposed to an apartment in an unrenovated building.
These conditions may be marginally more favorable, but the difference is between 0.1 and 0.2 points. "There is a difference, though a small one," she said.
However, loan conditions are mostly influenced by a borrower's capacity to pay and the property's value.
Pargma said that interest in loans has begun to increase slowly.
"Whereas there were 400 loan applications per week at the beginning of the year, in April and May there are approximately 600. It is not as high as it was a year ago, when it was about 40 percent higher, but those who are borrowing now may be making a more deliberate decision."
Pargma said that the average loan amount across all assets has climbed to €120,000, while it was €113,000 last year.
Vahter said that when wages rise, real estate will become once again more accessible and market activity will gradually revive.
"Euribor cannot rise by more than three or four percentage points. The impact of Euribor hike has already been felt, and the market will start to rebound once people's purchasing power has returned. It won't happen overnight or throughout the summer, but the availability of real estate will gradually improve in the following months."
Those who cannot afford to buy an apartment at this time are looking into the rental market, which has seen no significant changes while interest rates and Euribor have risen, Vahter said.
"The rental market is unaffected by the high interest rate and the relative calm in the real estate market."
Editor: Mirjam Mäekivi, Kristina Kersa