Estonian property market sees 33% drop in transactions

Estonian property market sees 33% drop in transactions YoY; No Immediate Revival Expected Despite ECB Holding Off Rate Hikes

Despite the European Central Bank (ECB) pausing interest rate increases, experts foresee no quick recovery for Estonia’s flagging housing market. Since last autumn, the ECB has raised rates ten times to counter inflation. This has discouraged new lending and affected existing loan holders, states Risto Vähi, an analyst at Uus Maa.

Year-on-year data reveals one-third fewer property transactions, confirms Vähi. Mihkel Eliste of Arco Vara has observed a declining trend since the spring-summer period of 2022. He notes the apartment market is roughly at 2015-2016 levels. For high-end housing, the market in some areas has regressed to 2013 or 2014 conditions.

Both Eliste and Vähi concur that an easing of interest rates will not spur a fast drop in credit costs or stimulate the housing market. Furthermore, the liquidity for residences priced above €250,000 has weakened, while the secondary market for apartments remains competitive.

Vähi remains cautiously optimistic that rate hikes have plateaued but does not anticipate a significant decline anytime soon.