What's going on with the housing market in Estonia ?
December 10, 2019 - Estonia
While the number of construction projects in the Estonian real estate market is notably large, no bubble burst such as the one that occurred in 2007 is to be expected, SEB economic analyst Mihkel Nestor said.
One does not need to be an analyst or real estate expert to see that the Estonian real estate market has been active for the past few years, Nestor said, adding that Tallinn and Tartu are full of cranes and whole new districts have been erected.
"Even in small towns where no major construction activity has occurred for decades, new buildings have suddenly popped up and many have also undergone renovations," Nestor said.
Construction volumes also indicate that the number of new buildings in Estonia even exceeds that from the notorious year 2007. While during peak real estate boom at the time, authorization for use was issued for altogether 567,000 square meters of residential space per year, the corresponding figure last year was 585,000 square meters.
The new record will be reached this year, however, as a total of 518,000 square meters of residential space has already been granted authorization for use in the first three quarters alone.
The price level of residential real estate alsogreatly exceeds that of 2007. While the average price was up to 1,200 euros per square meterin 2007, real estate transactions today are carried out at around 1,300 euros per square meter on average.
Few people are able to buy a new home using their savings alone, thus the total volume of home loans issued to households by banks have grown from 5.6 billion euros in late 2007 to close to eight billion.
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