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What will happen in Estonia’s real estate market? Will prices go up or down? Is Tallinn still a hotspot for foreign investors? How is Estonia’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with notaries, real estate agents, and clients who buy properties in Estonia, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Estonia will see a small drop in property prices as more homes are built
Estonia's real estate market is buzzing with activity, thanks to a surge in building permits recently.
In the first quarter of 2023, there was a 78.4% jump in new homes being completed, which means more options for buyers. This boom in construction is adding to the housing supply, making it a buyer's market.
Over the past four years, the total housing stock in Estonia has grown by 3.6%, reaching 739,000 units. This increase means more homes are available, giving potential buyers plenty of choices.
Even though housing prices have been on the rise, the growing supply of new apartments is expected to slow this trend. When there are more homes than buyers, prices tend to level off or even dip.
Experts predict that as more homes hit the market, competition among sellers will likely drive prices down a bit. This could be a great opportunity for those looking to buy.
Historically, when Estonia's housing supply has increased significantly, it has often led to a decline in house prices. This pattern suggests that the current building boom might result in more affordable housing options soon.
Sources: Global Property Guide, Trading Economics, Statista, Integra Dom
In this video, we can see how average real estate prices in Tallinn have fallen compared to previous months due to increased housing supply. This supports the prediction of a slight market decline.
2) Estonia’s property prices will rise moderately due to urbanization
Estonia is seeing a big shift as more people move to cities, with nearly 70% of the population now living in urban areas.
This move to city life is making places like Tallinn and Tartu very popular. Job growth and a positive outlook on the economy are drawing people in, which is pushing up home prices and keeping many in the rental market.
To make city living even better, the Estonian government and the European Investment Bank are pouring money into urban projects. They're focusing on improving transportation and public spaces, which makes these cities even more attractive.
Even though there are lots of new apartments being built, the vacancy rate was just 5% in September 2023, showing a balanced market. But with fewer new buildings expected by 2025, prices and rents are likely to climb.
For those thinking about buying property, this means acting sooner rather than later might be wise, as demand is set to keep rising.
Urbanization is clearly driving the market, and the overall residential property market in Estonia is expected to see moderate price increases as more people flock to the cities.
Sources: Trading Economics, European Investment Bank, DWS
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Estonia. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
3) Estonia’s property prices will rise in areas with strong digital infrastructure
Estonia is becoming a hotspot for those seeking properties with strong digital infrastructure.
With an impressive internet penetration rate of 93.7%, Estonia is a leader in digital connectivity. This robust network is a magnet for people who prioritize fast internet, especially in areas where connectivity is top-notch. Cities like Tallinn are at the forefront, drawing in tech professionals and expatriates who are boosting the housing market.
The tech industry in Estonia, particularly in urban centers, is booming. Tallinn, for instance, is not just a city; it's a tech hub with start-up incubators and accelerators that make it a desirable place to live. This influx of tech-savvy individuals is driving up the demand for housing, making these areas more attractive for property buyers.
The Estonian government is heavily investing in digital infrastructure, which is a game-changer for urban areas. By digitalizing public services and enhancing connectivity, they are making cities more appealing to both businesses and residents. This commitment is a major factor in the appreciation of property values in these regions.
Real estate trends show that properties in digitally advanced areas are on the rise. There's a high demand for tech-equipped and energy-efficient homes, reflecting a shift towards smart living. The move to remote work has only increased the need for homes with reliable digital connectivity, further driving this trend.
In Estonia, the combination of a thriving tech industry and government support for digital projects is creating a perfect storm for property value growth. As more people seek out areas with strong digital infrastructure, the real estate market in these regions is set to flourish.
Sources: DataReportal, Digital Strategy EU, Intelligent Cities Challenge
4) Estonia’s rental prices will drop slightly as more properties enter the market
The rental market in Estonia is shifting as more properties become available.
In bustling areas like Tallinn and Harju, construction projects have surged, leading to a noticeable increase in housing options. With a 50% rise in apartments for sale in 2023, it's no surprise that more properties are entering the rental market.
The economy isn't helping much either. Estonia's economy shrank by 1.3% in 2022 and stayed weak in 2023, making people more cautious about spending. This economic dip means fewer folks are looking to rent, pushing landlords to rethink their pricing.
Landlords, especially in pricier areas, are feeling the pinch. Discounts and incentives are becoming common as they try to attract tenants. According to Mihkel Eliste, a certified appraiser, rental prices in these segments have been dropping since August 2023.
With more properties and fewer renters, landlords are adjusting their strategies to fill vacancies. This shift is likely to lead to a slight decline in rental prices.
As the market adapts, tenants might find better deals and more options, making it an interesting time for potential renters.
Sources: Global Property Guide, GlobalData, Statista
5) Demand for eco-friendly homes in Estonia will grow due to government incentives for energy efficiency
Government incentives for energy-efficient homes are set to significantly boost the market for eco-friendly properties in Estonia.
In 2024, the Estonian government launched a 185 million euro funding initiative to support the renovation of apartment buildings. This ambitious plan aims to renovate around 400 buildings and improve 12,000 dwellings by 2027. This isn't their first rodeo; since 2021, over 105 million euros have already been spent, resulting in the renovation of 375 apartment buildings and 11,300 dwellings to a more energy-efficient C energy class.
Estonians are increasingly interested in sustainable living. Surveys show that more than half of Estonian e-shoppers expect companies to be environmentally responsible. This growing demand for sustainability is likely to translate into a preference for eco-friendly homes, further driving the market. The media is also playing a role, with projects like LIFE IP BuildEST raising public awareness and interest in energy-efficient living.
Green mortgages are making it easier for people to invest in eco-friendly properties. Offered by banks like SEB Group, these mortgages provide financial incentives for those who choose energy-efficient homes or make upgrades. This makes it financially attractive to opt for sustainable housing. Partnerships between the government and the private sector, as seen in the LIFE IP BuildEST project, are also promoting sustainable building practices.
These collaborations are creating a supportive environment for the growth of eco-friendly properties. The combination of government funding, consumer interest, and financial incentives is setting the stage for a boom in the market for sustainable homes. With the right support, Estonia could become a leader in eco-friendly living.
Sources: CA EPBD, DPD Estonia, SEB Group
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6) Rental prices in Estonia's smaller towns will drop as people relocate to cities
Estonia is seeing a big shift as more people move to cities like Tallinn, with the urban population now at 69.81%.
Since 1991, many counties in Estonia have lost over 25% of their population, as folks head to urban areas. This means fewer people are looking to rent in smaller towns, so landlords might have to drop prices to fill their properties.
In 2023, housing rents in Estonia fell by 8.86%, which shows that rental prices aren't keeping up with inflation. This drop is likely because more people are choosing city life over small-town living.
As Tallinn and other urban centers grow, the demand for housing there is rising, pulling even more people away from smaller towns. This trend is making it tough for landlords in these areas to keep their rental prices up.
With fewer tenants in smaller towns, landlords are feeling the pressure to lower rents to attract the dwindling number of renters. This shift is reshaping the rental market across the country.
Sources: Trading Economics, OECD, Statista
7) Rents in Tartu will rise as more students move in
Student numbers in Tartu are on the rise, thanks to the University of Tartu's growing appeal.
With more students flocking to Tartu, housing demand is shooting up. The University of Tartu attracts a diverse crowd, including many international students, which adds to the housing crunch. Students love the convenience of dorms, but there just aren't enough to go around, so many end up looking for private rentals.
Every year, rents spike when the academic year kicks off. This is a familiar pattern in Tartu, where the student population keeps growing. Students want to live close to campus, which makes the housing market even more competitive in those areas.
In Tartu, the rental market is tight because of the limited student accommodation options. The university dorms are popular for their fixed rents, but the limited spots mean many students have to find private housing. This situation drives up demand and, consequently, rental prices.
As the student population continues to grow, expect rents to keep climbing. The trend of increasing rents at the start of the academic year is likely to persist, especially with more students choosing Tartu for their studies.
Living near the university is a top priority for students, which further fuels the demand for nearby housing. This preference for proximity to campus means that areas close to the university are particularly competitive.
Sources: EduRank, University of Tartu, Erasmus Play, Times Higher Education
8) Interest in traditional wooden houses in Estonia will drop as modern, energy-efficient homes become more popular
Interest in traditional wooden houses in Estonia is declining.
This shift is partly because the real estate markets in places like Scandinavia, Germany, and the UK have cooled down since 2022, leading to less demand for Estonia's wooden houses. These homes were once a big export, but now the focus is changing.
People are now more interested in modern, energy-efficient homes. In early 2023, the number of new homes built in Estonia jumped by 78.4% from the previous year, showing a clear trend towards these types of homes.
The government is helping this trend along with energy efficiency subsidies for apartment retrofits, making it cheaper for people to choose energy-efficient options over traditional wooden homes.
Surveys show that Estonians prefer modern, sustainable housing. The real estate market is now all about tech-smart, eco-friendly buildings, which are popular because of Estonia's strong digital infrastructure and focus on sustainability.
Sources: UNECE, IEA, Global Property Guide
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.
9) Demand for homes near nature will grow in Estonia as outdoor activities become more popular
In Estonia, outdoor activities have become increasingly popular in recent years.
By 2023 and 2024, nearly half of the adult population was actively participating in outdoor sports, showing a clear trend towards embracing nature. This shift has naturally led to a higher demand for properties that offer easy access to the great outdoors. Imagine living near lush forests or serene lakes, where weekend hikes or kayaking trips are just a stone's throw away.
Sales of outdoor gear have also seen a boom, with a 37% increase compared to pre-pandemic levels. This surge suggests that more people are investing in an outdoor lifestyle, which often includes a desire to live closer to nature. The Estonian government is on board too, actively promoting outdoor recreation by developing infrastructure like hiking trails and national parks, making these areas even more attractive for potential homeowners.
Nature-based tourism is another factor driving the appeal of properties with nature access. The Green Destinations Estonian program has put the spotlight on the country's natural beauty, with several destinations receiving awards. This recognition has only increased the allure of these areas, making them hot spots for both tourists and potential property buyers.
Social media plays a big role in this trend, with content about outdoor adventures and nature exploration gaining significant traction. People are sharing their experiences, from breathtaking hikes to peaceful moments by the water, inspiring others to seek similar lifestyles. This online buzz is making nature-accessible properties even more desirable.
For those considering buying property in Estonia, the combination of a growing outdoor culture, government support, and the allure of nature-based tourism makes properties with access to nature a smart investment. Whether you're looking for a weekend getaway or a permanent home, the opportunity to live close to nature is becoming increasingly appealing.
Sources: European Commission, Outdoor Retailer, Visit Estonia
10) New Estonian homes will commonly include smart home technology as a standard feature
In Estonia, smart home technology is becoming a must-have in new residential developments.
Estonia's smart home market is on the rise, with a projected growth of 10.34% from 2024 to 2029, aiming for a market volume of $382.8 million by 2029. This surge is driven by the demand for devices that make life easier, save energy, and boost security. People want homes that fit seamlessly into their daily routines.
Globally, the smart home market is booming, and Estonia is no exception. Many home buyers are eager to invest in smart homes for the convenience and security they offer. In fact, about 75% of potential buyers are ready to pay extra for smart features, with 70% actively seeking them out.
Government incentives are a big part of this shift. Take Tartu's smart retrofitting project, for example. It's heavily subsidized, with 70% of costs covered by the EU and national funds. This makes it easier for residents to embrace smart home solutions, and similar models could spread to other areas.
As technology advances, the cost of smart home systems is dropping, making them more accessible. This trend is expected to continue, encouraging more people to adopt these technologies. Real estate reports in Estonia are likely to emphasize smart home features as a key selling point, pushing developers to include them in new projects.
With these developments, it's clear that smart home technology is set to become a standard feature in Estonian homes, driven by consumer demand and government support.
Sources: Statista, Exploding Topics, EBRD Green Cities
11) Suburban living in Estonia will become more attractive due to new infrastructure projects
Estonia is investing heavily in transportation infrastructure to connect suburban areas with urban centers.
In 2024, the government approved a EUR17.7 billion budget, focusing on the Ministry of Economic Affairs and the Ministry of Regional Affairs. This means more resources are being directed towards developing roads and railways that make suburban living more practical and appealing.
New highways and road networks are being built, addressing the previous backlog in road maintenance. The introduction of an automobile tax is expected to fund these improvements, enhancing connectivity between suburbs and cities. This could make living outside the city more convenient for daily commuters.
One of the most exciting projects is the Rail Baltica, a high-speed rail link that will connect Estonia with its neighbors. With €370 million allocated for 55 km of railway, this project will significantly reduce commute times, making suburban areas more attractive for potential homeowners.
These infrastructure developments are not just about convenience; they are about transforming the way people live and work in Estonia. By making suburban areas more accessible, the government is encouraging a shift towards suburban living, which could lead to a more balanced distribution of population and resources.
Sources: GlobeNewswire, Economy Finance, EBRD
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility. Finally, please note that we are not affiliated to any of the sources provided. Our analysis remains then 100% impartial.