Is now a good time to buy in Estonia?

Authored by the expert who managed and guided the team behind the Estonia Property Pack

Everything you need to know before buying real estate is included in our Estonia Property Pack

Who is the author of this content?

INVESTROPA

A team specialized in real estate investing in European countries

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Estonia. If you'd like to learn more about us, you can check our presentation page.

How this content was created 🔎📝

At InvestRopa, we explore the Estonian real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Tallinn, Tartu, and Pärnu. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

What are property prices doing in Estonia right now?

Estonia's residential property prices are experiencing steady upward momentum as of September 2025.

Tallinn apartments averaged €3,084 per square meter in June 2025, representing a solid 3-7% annual increase across the capital city. Nationwide statistics show house prices rose 4.6% year-on-year in Q1 2025, with some areas reporting increases of nearly 9% annually.

The price variations across Estonia are significant, with rural municipalities often showing prices below €750 per square meter while prime Tallinn neighborhoods can exceed €10,000 per square meter. Urban centers like Tartu and Pärnu demonstrate more moderate price levels but still show consistent growth patterns.

This price growth is supported by limited housing supply in desirable areas and sustained demand from both domestic buyers and international investors seeking European Union property exposure.

It's something we develop in our Estonia property pack.

How do prices today compare to five years ago?

Estonia has delivered exceptional property price appreciation over the past five years, making it one of the standout performers in the Baltic region.

Nominal residential property prices have surged approximately 178% since 2020, placing Estonia among the fastest-appreciating real estate markets in Northern Europe. This dramatic increase has been driven by a combination of strong demand, particularly in urban areas, and constrained supply of quality housing stock.

The appreciation has been most pronounced in Tallinn and other major cities, where international interest and domestic urbanization trends have created sustained upward pressure on prices. Even secondary cities like Tartu have experienced substantial gains, though typically at more moderate levels than the capital.

This five-year performance significantly outpaces regional averages and demonstrates the underlying strength of Estonia's property fundamentals during a period of broader European economic uncertainty.

What's the overall state of the Estonian economy?

Estonia's economy is in a gradual recovery phase as of September 2025, showing resilience despite regional challenges.

GDP growth is forecast at 1.5% for 2025, with expectations of 2-3% growth in subsequent years as the recovery gains momentum. While this represents modest growth, it reflects a stable economic environment that supports continued property market development.

Inflation remains elevated at 5.4% in 2025 but is expected to decline toward 3% in coming years, providing better purchasing power stability for property buyers. Importantly, wage growth has been outpacing property price increases recently, which helps maintain affordability levels for domestic buyers.

The Estonian economy benefits from its position within the European Union, strong digital infrastructure, and diversified economic base spanning technology, manufacturing, and services sectors.

Are mortgage interest rates in Estonia going up or down?

Mortgage interest rates in Estonia are currently in a declining phase, offering improved financing conditions for property buyers.

As of March 2025, mortgage rates averaged 4.11%, representing a gradual decline from previous peaks as EURIBOR rates have eased. This downward trend is expected to continue through 2026, making property financing more accessible and affordable.

The interest rate environment has improved significantly from the restrictive levels seen in 2023-2024, reducing borrowing costs and supporting increased transaction activity in the property market. Estonian banks are offering competitive rates to qualified borrowers, with some institutions providing preferential terms for energy-efficient properties.

This favorable rate trajectory is particularly beneficial for investors and buyers who rely on financing, as lower borrowing costs improve overall investment returns and affordability.

How easy is it for a foreigner to get financing in Estonia?

Foreign buyers can obtain mortgage financing in Estonia, though the process involves additional requirements compared to Estonian residents.

Estonian banks generally require foreign borrowers to provide higher down payments, typically 30-40% of the property value compared to 15-20% for residents. Documentation requirements are more extensive, including proof of income from foreign sources, employment verification, and detailed financial statements.

The financing process is generally more accessible in major cities like Tallinn and Tartu, where banks have more experience with international clients. Smaller towns may have more restrictive lending policies for foreign buyers.

EU citizens typically face fewer obstacles than non-EU nationals, benefiting from streamlined documentation requirements and more favorable lending terms. Some banks offer specialized programs for foreign property investors, particularly those with substantial assets or established banking relationships.

What are rental yields like in Tallinn and other big cities?

Estonia's major cities offer attractive rental yields that support strong investment fundamentals.

Tallinn currently delivers rental yields averaging 4-6% annually, depending on property type and district location. Central areas with good transport connections and modern amenities typically achieve yields toward the higher end of this range.

Secondary cities like Tartu and Pärnu report slightly lower yields, typically in the 3.5-5% range, but often with lower entry costs and stable tenant demand from university students and seasonal residents. These markets can offer good value for investors seeking diversification outside the capital.

The yield calculations benefit from Estonia's relatively low property taxes and maintenance costs compared to other European markets, making net returns particularly attractive for international investors.

It's something we develop in our Estonia property pack.

How strong is the demand for rental properties at the moment?

Rental property demand in Estonia remains robust as of September 2025, driven by multiple supporting factors.

Urban migration continues to fuel rental demand in major cities, particularly Tallinn, as people move from rural areas seeking employment opportunities. The capital's growing technology sector and international business presence create steady demand from both domestic and expatriate tenants.

Limited housing supply in central urban areas maintains tight rental markets, with vacancy rates remaining low in desirable neighborhoods. Wage growth and Estonia's EU membership status attract international workers who typically enter the rental market before considering property purchases.

Student populations in university cities like Tartu provide additional rental demand stability, while coastal areas like Pärnu benefit from both permanent residents and seasonal rental opportunities that can boost overall returns.

What's the outlook for population growth or decline in Estonia?

Estonia's population dynamics present a mixed but generally supportive picture for property investment.

Region Type	Population Trend	Property Market Impact
Tallinn Metropolitan Area	Continued growth from migration	Strong housing demand support
Major Cities (Tartu, Pärnu)	Stable to modest growth	Steady rental and sales demand
Secondary Urban Centers	Mixed trends, some decline	Selective opportunities
Rural Areas	Population decline	Limited investment appeal
Border Regions	Demographic challenges	Avoid for investment

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Estonia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

Are there any new government policies affecting real estate?

Several important policy changes are impacting Estonia's real estate market as of 2025.

VAT rates increased from 22% to 24% in July 2025, affecting new construction projects and potentially slowing new supply development. Personal income tax also rose from 20% to 22%, which may impact buyers' purchasing power but hasn't significantly dampened market activity.

No new restrictions have been implemented on foreign property buyers as of 2025, maintaining Estonia's open approach to international real estate investment. The government continues to support foreign investment as part of its broader economic development strategy.

Construction cost inflation and the higher tax environment may restrain new development projects, potentially supporting property values through continued supply constraints in popular areas.

How stable is the political and legal system for property owners?

Estonia maintains one of the most stable and transparent property ownership environments in Eastern Europe.

The political system demonstrates consistent stability with strong democratic institutions and rule of law protections that safeguard property rights. As an EU member since 2004, Estonia operates under European legal frameworks that provide additional security for international property owners.

The legal system offers transparent property registration processes, particularly for urban real estate, with clear title procedures and reliable legal recourse. Foreign investors face minimal political risk, with property rights well-established in both law and practice.

Estonia's digital-first approach to government services makes property transactions and ongoing ownership obligations more efficient compared to many European countries, reducing bureaucratic complexity for international buyers.

What kinds of taxes and transaction costs should I expect?

Estonia offers a relatively favorable tax environment for property owners with reasonable transaction costs.

1. **Transaction costs typically range 3-7% of property price** 2. **No annual property tax on residential dwellings** 3. **Land tax may apply depending on location** 4. **VAT of 24% applies to new construction** 5. **Capital gains tax applies to non-residents upon sale** 6. **Notary fees and land register fees are standard** 7. **Legal and survey costs should be budgeted**

The absence of annual property taxes on residential buildings makes ongoing ownership costs significantly lower than many European countries. However, buyers should budget for land tax in certain municipalities and understand capital gains implications for future sales.

It's something we develop in our Estonia property pack.

What do local experts say about the market over the next few years?

Local real estate experts maintain cautiously optimistic forecasts for Estonia's property market through 2026-2027.

Most forecasts expect property prices to continue rising 3-7% annually through 2026, supported by continued strong demand in Tallinn and other urban centers. The gradual decline in interest rates is expected to maintain transaction activity and support price growth.

Experts highlight structural resilience in urban markets, particularly Tallinn, where international demand and domestic urbanization provide sustained support. The technology sector's continued growth and Estonia's strategic position within the EU create positive long-term fundamentals.

Key risks identified include higher tax burdens, construction cost inflation, and demographic challenges in rural areas. However, Tallinn and major regional cities are expected to remain attractive for both investors and residents, with rental markets continuing to show strength.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Realting - Estonia Apartment Market Prices and Transactions
2. InvestRopa - Estonia Price Forecasts
3. Bank of Estonia - Economic Forecast
4. OECD Economic Outlook - Estonia
5. Trading Economics - Estonia House Price Index
6. Global Property Guide - Estonia Price Changes
7. IMF - Estonia Economic Report
8. InvestRopa - Tallinn Price Forecasts
9. Scope Group Analysis
10. IMF - Estonia Article IV Consultation