The Development of The IT Sector Affects the Estonian Real Estate Market
September 24, 2021
18
But now even the middle class can't afford to buy a home.
High salaries in the IT sector increase real estate prices in Tallinn, and large apartments are sold out even before they enter the market, the real estate agency 1Partner Kinnisvara reported. The head of the agency, Martin Vahter, said that the stock of expensive four-or five-room apartments with access to the roof is almost exhausted in the Estonian capital.
During the first half of 2021, interest in real estate has increased dramatically, raising prices to new highs. Despite the fact that activity has decreased during the year, there are currently fewer apartments for sale.
As a result, the average housing price increased by 8.8% in Estonia as a whole in the first half of 2021, by 15% for new real estate in the center of the capital and by more than 20% in the Haabersti district of Tallinn, said Tõnu Palm, the chief economist of Luminor. Currently, there is a shortage of new projects, and in combination with the increase in the cost of building materials, this leads to an increase in prices.
The deficit that was observed in the market when developers stopped their projects due to blockages is gradually being corrected, as new construction resumes. More and more offers are coming to the market.
"In recent months, the number of apartment sales in Estonia has increased dramatically. A number of transactions were concluded with quite wealthy people working mainly in the field of cryptocurrencies. They buy super-expensive apartments without even coming for a personal inspection and without specifying the price. Now often large and expensive apartments do not have time to get to the market, they are bought up beforehand," Vahter said.
According to the Land Department, in the first half of 2021, 13,063 apartment purchase and sale transactions were made in Estonia, which is a third more than a year earlier. The total amount of transactions amounted to €1.15 billion, and the number of transactions involving mortgages has almost halved compared to the first half of last year.
The boom in the IT sector also affects ordinary people, whose wages are not growing at such a rapid pace. Now often even the middle class cannot afford their own housing and chooses long-term rent," the expert adds.
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