Not only is the market skewed towards Tallinn and to a certain extent Tartu, but municipalities, while they desire to attract new residents, often lack land under their ownership which they could put on sale.

A casual glance while traveling around Estonia may lead one to notice many houses and properties which are apparently vacant, and not only in the most sparsely populated areas, but also in towns and villages.

One such settlement is Põltsamaa, Jõgeva County, home of the famous brand of mustard and around 120 kilometers southeast of the capital.

Põltsamaa Municipality Mayor Karro Külanurm said, that for the most part, these are privately owned, often second homes, and not on sale.

Külanrum said: "People often think that maybe they can return to their hometown in retirement, or keep it as a summer house. Many people have plans like that."

Over half of Estonia's 1.3 million people live in Tallinn, Tartu or the surrounding areas of both cities, leaving more outlying areas of the country often trying to attract taxpayers and permanent residents – sometimes with some success.

For instance, some years ago Tõrva, Valga County, quite close to the Latvian border, offered 17 plots in a new residential area, which were all reserved in less than an hour.

Rait Pihelgas, deputy chief of the Association of Estonian Cities and Municipalities (Linnade ja valdade liit) Järva Municipality Council chair also provided an example: "There is the case of Imavere, Järva County, where an 18-apartment block was constructed, and which ended up being over-subscribed."

Pihelgas suggested that one way to attract people to more rural areas is to create an up-to-date living environment, though conceded that this would take time and investment.

"However, if new buildings are constructed, people will come, especially if there are jobs and public services available," he said.

Prior to the 2017 local government reform, which radically cut down on the number of municipalities nationwide, to its current figure of 79, Põltsamaa, population a little over 4,000, also presented residential plots replete with building rights, which could be purchased after the house was completed.

On this Mayor Külanurm said: "Up to now, all the plots have owners, and everyone is building on them, while a large number of these [buildings] have already been sold; most of the houses are already completed."

Rait Pihelgas of the municipalities association suggested that local governments could support homebuilders by developing the necessary infrastructure.

He said: "Someone might find land, but if it lacks essential infrastructure, building there would be quite expensive. Perhaps the solution is for the municipality to invest and build the required infrastructure. Then the individual only needs to build the house, not the water or sewage systems too."

At the same time, municipalities' resources and capabilities to actually do this vary, he conceded.

Mayor of Põhja-Sakala Rural Municipality Karel Tölp said the state's tax policy needs to change to encourage more new residents in the area, yet at the same time, he found the so-called Robin Hood policy of taking money from wealthier municipalities to redistribute them to less wealthy ones would not be effect.

There are also variations in how much land owned by local government to build on is available, Tölp noted, drawing on his previous experience from leading another largely rural administrative area, the former Tahkuranna municipality, now Häädemeeste Municipality in Pärnu County.

The question largely depends on who owns the land. If it belongs to the state, then how easily and by what methods can the municipality acquire it?" Tölp said, noting that the Tahkuranna municipality had been relatively land-rich.

A survey among Põltsamaa residents showed that the lack of quality housing is also a significant problem, as there are very few rental properties.

Mayor Külanurm noted that currently there is no new land either available or suitable for construction.

In some cases, negotiating with the state has paid off, including with regard to another area exerting pressure on land ownership -that of defense.

"We have also received approval from the state to acquire land owned by the Defense League (Kaitseliit), and we have gone on to acquire it," Külanurm said.

His municipality has been trying to take a more active role in apartment building in recent years, he added. "We are working with an entrepreneur to build a rental house with 24 apartments, and this project is progressing well."

Külanurm added that there are currently no plans to raise the land tax in that municipality, despite a proposed hike in land tax.

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