Swedbank: Baltic home loan market moving in different directions

TALLINN - Swedbank's first-quarter data reveals a diverging trend in the Baltic home loan market: while Estonia's market is increasingly concentrating in Harju County, other regions in Latvia and Lithuania are gaining prominence. In the first quarter, 67 percent of Swedbank's new home loans in Estonia were issued in Harju County.

"While in Latvia and Lithuania the share of capital regions slightly decreased and the role of other regions increased, in Estonia the share of Harju County continued to grow. This reflects that economic activity, job opportunities, and new developments in Estonia are still strongly concentrated in Tallinn and its surroundings," said Anne Pärgma, Head of Housing Loans at Swedbank.

Harju County's share of Swedbank's new home loan agreements increased by four percentage points year-on-year. Meanwhile, the shares of the Riga region in Latvia and the Vilnius region in Lithuania both declined by a couple of percentage points.

According to Swedbank's data, the highest average home loan amount was in Harju County at 169,000 euros, followed by Tartu County (152,000 euros) and Pärnu County (126,000 euros). However, the fastest year-on-year growth in average loan amounts during the first quarter was seen in Hiiu, Järva, and Pärnu counties, at 49, 33, and 18 percent, respectively.

"Larger loan amounts continue to be concentrated in major centers with more expensive real estate and a higher number of new developments. Additionally, we are seeing very rapid growth in several smaller counties, indicating that interest in home purchasing remains strong even outside the main population hubs," Pärgma said.

The largest drop in the average loan amount occurred in Jõgeva, Lääne, and Lääne-Viru counties, with decreases of 48, 22, and 10 percent, respectively. "In smaller counties, however, these changes should be viewed with some caution, as a lower volume of transactions can lead to greater fluctuations in average figures when comparing different quarters or years," she added.

According to data from the Land Board, 4,105 real estate sales transactions were conducted in Harju County in the first quarter, by far the highest figure among all counties. Tartu County followed with 1,016 transactions and Ida-Viru County with 692. The lowest number of transactions was recorded in Hiiu County, with just 35 in the first quarter.

Apartment prices also continued to rise in the first quarter. The average price per square meter for new apartments in Tallinn reached 4,583 euros, an eight percent increase year-on-year. Meanwhile, the average price for secondary market apartments in Tallinn rose by nearly six percent. Outside of Tallinn, the average price per square meter was 3,342 euros for new apartments and 1,352 euros for those on the secondary market.