According to Risto Vähi, an analyst at Estonia’s largest real estate agency, Uus Maa, rental prices bottomed out in winter and spring, but demand, and with it prices, started to rise. This is especially noticeable when it comes to cheaper apartments.
“From a rental property owner’s perspective, there is significant demand for both short-term and long-term rentals. On the one hand, many people are now adopting a wait-and-see attitude towards buying and therefore prefer to rent, and on the other hand, demand is supported by the peak of the tourist season,” Vähi added.
“Now there is a very strong demand for rental accommodation in Tallinn by the sea in the area between Rotermann and Noblessner, you can say it is the golden mile, and in Kalamaja. If the house is beautiful, it is gladly rented short and long term, including in the suburbs – for example in Nõmme.It is obvious that areas such as the old town and the area around Kentmanni Street, where offers were once very hot, have lost their popularity Vähi said.
Due to demand, the number of rental offers in Tallinn has decreased by 5% in recent months. If the prices of more expensive properties remained at the same level, the prices of less expensive properties increased. For example, in dormitories, compared to winter, prices have increased by up to 15%.
According to analyst Uus Maa, cheaper and more liquid real estate is an indicator of long-term real estate trends. “Usually changes start to happen in residential areas first, and the rest of the market follows. I am absolutely convinced that rental prices will no longer fall, but rather start to rise as demand increases, especially when students start looking for accommodation again in the fall,” Vähi said.
“Now, after many years, there is a rare situation – the monthly rent is lower than the monthly payment of a bank loan in case of purchase, but soon the market will inevitably balance. Interest rates on bank loans may start to fall next year and in the long run the purchase will be even more profitable,” Vähi added.