TALLINN - As the Baltics continue to attract foreign investment, real estate experts have pointed out that demand for new residential property in Estonia far exceeds supply.
As a result, the rate of housing construction is expected to grow significantly in the coming years, a survey by Pindi Kinnisvara (Pindi Real Estate) suggests.
According to Peep Sooman, marketing director at Pindi Kinnisvara, intense building construction has not watered down prices. At first glance it may seem that numerous new apartment houses are being built in Tallinn, but since demand is so high very little actually becomes available, Sooman explained at a news conference on March 8.
New apartments are usually booked before the developer even begins construction, he explained.
"Some 2,000 new apartments were built in Tallinn last year, which is too little in view of the overall volume of the market," he said, adding that anywhere from 2,800 to 3,000 apartments could be added in the capital this year.
What's more, with the low cost of borrowing, consumers are paying little heed to the prices they are paying.
"People who are buying an apartment with a loan now - they have absolutely no interest in the price per square meter," Sooman said. "The client looks at the size of the monthly payment, and it doesn't make a difference whether it's 3,200 kroons (200 euros) or 3,400 kroons," he explained.
Kinnisvara anticipates that prices on the Estonian housing market will rise 5 percent to 10 percent during the first half of this year.
It is difficult, however, to offer a forecast for the second half of the year, Sooman said, because a lot depends on emotional factors.
Reports also show that increased construction volumes are not expected to lower prices, as construction costs are set to rise together with the increase in people's incomes.
The market for private houses reveals that there is bigger demand for houses within the lower price segment costing between 1.3 billion kroons and 1.5 billion kroons. Sooman explained that this trend has much to do with the fact that most well-off residents have already bought a house for themselves.