In January, the average price per square meter for apartments in Tallinn was 14 percent cheaper than in December, showing a decrease to €2,876 from December's average of €3,349, according to preliminary data from the Land Board. This marked a one-month decrease of 14 percent.

The number of transactions also decreased, with 538 apartment transactions in January compared to 813 in December, a 34 percent drop. However, this January's transactions were still higher than the previous year's January, which saw 454 transactions.

The average size of the apartments sold in January was 53 square meters. The cheapest apartment was purchased for €6,082 and the most expensive for €891,000.

Katrin Rohtla, a communications adviser for the Land Board, noted that the January price information is not yet fully accurate. As notaries are required to send a deed to the cadastral registrar within ten days of signing the contract, the statistics might still be updated with a few transactions.

Ain Kivisaar, CEO of real estate developer Metro Capital, commented on the January price drop, suggesting that it should not be seen as indicative of a broader trend. He explained that a year-end price surge followed by a January drop is an annual anomaly. When looking at price changes over the year, the market is still on an upward trend.

The average price per square meter in January of the previous year was €2,776, making this January 3.5 percent more expensive than the same month last year.

Kivisaar further explained that at the end of the year, a large number of new apartments are typically handed over to buyers. These sales figures are reflected in the statistics, and since new apartments tend to be more expensive, they influence the average price at year's end.

Igor Habal, a board member of Uus Maa, highlighted the seasonality of the real estate market on "Terevisioon," noting that January is always a poor month compared to December.

He pointed out that the main influences for the ongoing year include cheaper borrowing, improved purchasing power due to the expectation that property prices will not increase this year while wages will rise, making apartment prices somewhat more affordable.

"Over the last two-three years, we have had the most active real estate market in Europe per thousand people. The years 2021-2022 were more active than 2006-2007, marking a second boom, and in the context of the last ten years, we have only come down by ten percent from the average number of transactions," Habal said.

According to him, prices have dropped by 5-7percent in both the secondary market and new developments.

Ain Kivisaar mentioned that the sale of new developments has been quite stable and has even improved compared to the same period last year. He highlighted the fall of 2022 as the most significant downturn, after which sales have been relatively stable. The future movement of the price per square meter for apartments in Tallinn depends on buyer confidence.

"In the next six months, I do not foresee a significant revitalization of the market, as the essential factors for it are absent. There's no indication that economic growth will accelerate soon or that interest rates would significantly decrease in the first half of the year. Changes are more likely to occur in the second half of the year," he predicted, adding that the real estate market reacts to changes in the overall economic environment with a slight delay.

Kivisaar estimates that market activity and price levels might start to increase by the end of the year or even a year and more later.

Developers are currently cautious about making new plans given the market situation. Kivisaar noted that in some areas of Tallinn, there are quite a lot of new apartments ready, and the construction or introduction of new apartments has essentially ceased there.

"The best example is Õismäe where many new projects have started in recent years and currently have the most ready apartments for sale. I believe that developers will not initiate new projects there in the coming years," he acknowledged.

This means that, according to Kivisaar, buyers can currently negotiate prices the most in Haabersti district and ask developers for the best offers.

"From what I know, developers have not only offered free parking spaces and storage units but have also actually reduced the prices of apartments," said the representative of Metro Capital.

However, he confirmed that there is no indication that any developer is in significant trouble with their inventory of ready apartments, and such inventory is evenly distributed among several developers.

Kivisaar added that developers are currently accounting for a sales period that is longer than the construction time of a building, and he does not believe that this would cause significant liquidity problems for larger developers or pressure them into making substantial price reductions.

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