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Experts forecast quiet year for Estonia's real estate market

Construction in Tallinn's Kadriorg District.
Construction in Tallinn's Kadriorg District. Source: Siim Lõvi/ERR

The average square meter price of sold apartments was considerably lower in January than in December. One of the reasons for a busy end of 2023 could have been the expectation of tax rises.

Experts believe that the real estate market will continue to be quiet this year.

Data from the Land Board shows, that in January, the average price per square meter of an apartment in Tallinn increased by almost 4 percent compared to January 2023, but decreased by nearly 14 percent compared to December.

Outside of Tallinn, the annual decrease was 6.8 percent and 18 percent compared to December.

Real estate expert Tõnu Toompark said: "In December, there were significantly more new apartment deals, while in January there were no more new apartment deals. It happens every year that developers hand over new apartments in December. In January, there were transactions of after-market apartments, which are cheaper."

Real estate expert Risto Vähi said: "One thing is that we always finish the matter at the end of the year, we conclude the deals, but the other was that the expected tax increase could have affected the completion of it. Since some contracts include the addition of VAT, it was even cheaper in December."

Jaan Mäe, head of Merko Ehitus Eesti said: "At the end of the year, there was a lot of activity in terms of formalizing transactions, and Merko also formalized quite a lot of real estate contracts for new apartments in December /.../ I think that this increase in VAT certainly had an impact."

In 2024, the market is expected to continue to be quiet until the economic situation improves. There will be no major changes in price.

"Pressure on prices will continue, but putting positive/negative factors aside, I would expect a moderate increase of up to 5 percent in the current year, the same as in 2023," said Toompark.

Vähi said: "I think we'll definitely see some further declines this year. It could well be 10 percent. It depends on how many new apartments are on the market. Fewer and fewer of them are being built, and their share of the market is falling all the time."

New apartments are being built, but it is becoming more difficult to sell them in advance.

"Today, it tends to be down to good luck. In today's real estate market, apartment buyers have the unique opportunity to have a very large number of ready-made apartments where the customer can see for themselves the quality of the workmanship and the quality of the finish," said Mäe.

However, he said the price of new apartments is not expected to fall as construction prices have risen.

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Editor: Merili Nael, Helen Wright

Source: Aktuaalne kaamera

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