Estonia's real estate market
In the fourth quarter of 2015, a total of 15,110 transactions worth about 747 million euros were made. A year ago in the fourth quarter, a total of 13,830 real estate transactions were made, worth 628 million euros.
Real estate price index growth in the third quarter of 2015 compared to the third quarter of 2014 was 14.5% and 2.5% compared to the last quarter. The apartment price index grew by 9.3%, undeveloped land price index of 27.4%, and the built-up residential price index of 18.5%.
Yet the real estate prices have already been climbing rapidly for the past couple of years, especially in the capital of Estonia. Tallinn and the surrounding county, considered the "first Estonia" compared to the rest of the country "2nd Estonia" has seen even more aggressive rise in prices, therefore pushing up there rates for the whole country. As most young people come to study and live in Tallinn for the first years of their adult lives, this situation is making it hard for young people, especially for young families to buy themselves a home. At this point it is very hard to find an apartment/house in Tallinn that costs under a 100,000€ and is in a condition where you could move in today. Yet these apartments, especially the new ones being built are more and more often bought by foreigners, consequently showing the market that there are enough people to buy the apartments for the current prices, allowing brokers to ask for even higher prices in the near future.
As the average salary in Estonia is greatly lower than the average in the rest of the Europe, it is becoming more and more difficult for locals to buy real estate. More loans are being taken, yet younger people are often not able to get a loan either. Therefore I predict that in the third or 4th quarter of the year 2016, the real estate market of Estonia is about the crash. Prices are going to drop and once again the market will hit a recession, leaving unfinished buildings standing by the sides of the roads.
