In December, 803 transactions with apartments in Tallinn were carried out and the average price per square meter rose to a record 3,357 euros. According to Martin Vahter, CEO of 1Partner, there is no point in looking for a new price increase, because December is an active month for transactions every year and the VAT increase at the beginning of the year also gave impetus.
“Happiness is still fleeting because it is a statistical indicator. This is more related to the fact that they wanted to complete the transactions at the end of the year, because this year the new VAT rate came into force. In the case of new construction, which are taxed with VAT, we tried to complete these transactions last year so that properties did not become more expensive, and this led to a relatively higher share of new apartments in the total number of transactions and this increased the average price” , said Martin Vahter, head of real estate at 1Partner.
There are still no investors on the real estate market and mainly home buyers are active, while the secondary market is decidedly more active. The most expensive apartment sold in December cost 1.64 million euros. Some activity may be added to the property market at the start of the year from the decline in the six-month Euribor, observed since October, and futures indicate that the decline will continue.
“If we consider the reference interest rate of the European Central Bank, i.e. the interest rate of the fixed deposit option, according to our forecasts it should rise from the current 4% to 2.5% by the end of the year, and if we also put aside the Euribor futures, that is, as the markets expect, that the three- or six-month Euribor could reach the level of 2.3% by the end of this year”, stated the chief economist of Swedbank Tõnu Mertsina.
According to Mertsina, the European Central Bank itself should spread the message more widely that a lowering of the Euribor is expected in the future, to give buyers greater security. The year 2023 has been a quiet year for the real estate industry. While usually 1,100-1,200 transactions are carried out per month in Tallinn, last year only 500-800 were carried out, which means the market is down by a third, Vahter said.
“The first half of 2024 will follow the same pace. There are some positive signs, for example the Euribor is expected to fall. This is a relief for existing customers and also for future borrowers, but the real estate sector is also strongly affected from consumer confidence, which is still low today. But we hope that it will increase gradually, because the purchasing power will increase, the interest rate will decrease. They all have a reference period of six months to a year until they start doing their effect,” Vahter added.
This year, real estate market activity could also be negatively affected by the decline in people’s confidence, linked to the increase in unemployment. Even the political-economic situation and the economic forecasts are gloomier than expected.
Find out more in the video in the header. More information on “TV3 news” can be found HERE.
2024-01-05 15:00:00
an-increase-in-consumer-confidence-and-a-decline-in-euribor-tv3-is-expected