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Join the winners: investing in the residential areas of Tallinn

Promising areas for investment / From crisis to boom / The Path to the Dream Home
21.01.2024
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Join the winners: investing in the residential areas of Tallinn

The Influence of the Economy on the Housing Market

Experts predict that due to economic shocks, house prices may fall by up to 5%. The market situation will improve if loans become cheaper.

Economic Outlook

Banking experts predict that from April 2024, the Euribor rate will decrease, reaching 3%. This will lead to a reduction in monthly mortgage payments by 55-60 euros for loans of 100,000 euros, easing the burden for borrowers. Such steps can activate the market environment.

Market Perspectives

The impact on the housing sector is expected in the second half of the year, with significant effects not expected immediately. It is forecasted that areas with secondary residential properties, which have experienced the greatest decline since last year, will be the first to recover.

New Construction Market

Experts doubt the quick recovery of the new construction sector this year. In the capital of Estonia, Tallinn, the decline in orders for new apartments has reached 75% of the maximum recorded three years ago. Currently, approximately 33% of the areas in newly built residential complexes remain unsold. Market conditions, characterized by stagnant demand, could prompt developers to significantly reduce housing prices, considering the status quo in the supply of residential properties over the past year.

Construction Market Dynamics

Activity in the field of construction preparation has noticeably increased, characterized by an increase in the number of applications for permits. However, despite this, bank financing for housing construction is decreasing. Due to the decline in demand for new housing, developers are forced to postpone the launch of new projects, as maintaining previous construction volumes is no longer economically justified.

The Real Estate Market Situation in Estonia

In recent months, construction companies in smaller cities in Estonia have faced financial difficulties. The situation is particularly difficult in the region.

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