Estonian โHousing Market Shows Strong Signs of Recovery โขwith loan Growth & Falling Payments
Estonia‘s housing loan market is experiencing โa resurgence, fueled by declining interest rates andโ growing โborrower confidence. Data indicates a โsignificant increase in loan โคactivity, with average monthly mortgage payments decreasing byโฃ approximately โฌ80.
According to Bank of Estonia economistโ Taavi raudsaar, the housing loan market has been steadily recovering over the โpast year โand a half. Through the first ten months of this year, loan volume has โincreased by roughly 15% compared to the same period last year, with the average loan amount rising by 9% to โโฌ140,000 (up from โฌ130,000โข a year ago). The โtypical mortgageโข term โขremains around 26 years.
While the โnumber of loan โ applications has decreased byโฃ 13.5% year-over-year, Swedbank mortgage area manager Anneโค Pรคrgma reports a 30% โincrease โฃin finalized loan agreements.This suggests a shift towards more decisive borrowers who haveโค already identified properties. โ Pรคrgma attributes this to increasedโ confidenceโค in transactions. Potential borrowers โฃmay alsoโฃ be acting in anticipation of planned โincome tax changes expected to โincrease disposable income.
A key driver of this market activity is the recent drop in the Euribor rate – approximately oneโ percentage point year-over-year – directly translating into lower monthly mortgage costs for borrowers.
The recovery โคis โalso evident in new developments. Endover, a real โestate group, is โexperiencingโฃ strong โขsales at its Volta Quarter project in Pรตhja-Tallinn, aโค rapidly growing โarea where new property โคprices โฃare now exceeding those โคin the city center.โ CEO Roul Tutt believes the Estonian real estate market has “reached the bottom”โค and โis poised for “stable growth,”โ citing market maturity, stability,โ and lower interest rates as supporting factors. He notes the market is now capable of absorbingโ new housing supply.