EXPERT ⟩ In winter the real estate market hits rock bottom

According to Igor Habal, member of the board of directors of Uus Maa, together with rising taxes and growing unemployment, the bottom of the economic crisis will probably be reached in the first quarter. “Since previously signed contracts for expensive new constructions have been delivered this year and there are fewer new ones, the statistics of real estate transactions in the first and second quarters are probably red. At the same time, the economic downturn seems to be rather mild, markets expect lower loan interest next year and employment is still strong. The number of people who have had difficulty paying bank loans is also low, the percentage of loans unpaid for more than a year month is less than 1%,” says Habal.

“If in previous years before the winter there had been a lot of news that increased uncertainty, from the coronavirus, to the start of the war to the rapid increase in electricity and gas prices, this year there are no such shocks “Consumer confidence is low, but the real estate market should become more active again in the second half of the year with the decline in Euribor,” Habal added.

Currently, according to Habal, the demand for real estate is quite low, the current situation will continue even in winter and sellers must take this into account. The gap between the expectations of owners and buyers is around 10% and those who want to sell should be flexible.

According to a member of the board of directors of Uus Maa, transactions are still carried out, but since the loan conditions have become more stringent both in terms of monthly payment and self-financing, apartments are being purchased at cheaper prices than before .

“A fair amount of demand is for renovated apartments on the secondary market, which the average person can afford with a bank loan, perhaps in the order of 100,000-150,000 euros. The number of apartment transactions above 250,000 euros is sharply declining. Also the availability of houses has decreased, and the most active market is in and around Tallinn between 300,000 and 500,000 euros,” added Habal. “It is also worth noting that availability has decreased, especially in the middle class.”

Next year, prices of new developments will depend on developers’ financial reserve and ability to service loans taken. If the prices of apartments on the secondary market in Tallinn have now fallen by 10%, in the case of new buildings the discounts have become more persistent due to the slowdown in sales. The decline in activity was greatest in the investment apartment segment and in areas developed and purchased for rent and less for home ownership. The situation is similar, for example, for properties in Pärnu, where prices increased in the summer with the tourism boom and now the situation is rather calm. Numerous real estate projects that started in better times are still being concluded, so the number of offers temporarily increases and some of them even reach the rental market.

2024-01-04 10:18:30
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