If the average price per square meter of residential real estate has remained steady for several years, next year new developments may face multiple price increases, warns Kristjan-Thor Vähi, head of Invego, one of Estonia’s largest real estate developers in recent years.
“I myself am one of many who have later thought about several apartments, ‘why didn’t I buy this earlier?’ I believe today is exactly one such buying moment, because in less than a year, prices of new homes will definitely be higher compared to today,” Vähi offers his view on the market situation and explains that this fall has probably been the best time to buy a new home in recent years. “Almost everything has gotten more expensive, but real estate hasn’t yet, wages have risen, and Euribor has quickly dropped — all of this has made buying a new home relatively cheaper right now compared to everything else,” Vähi analyzes.
According to the Invego CEO, strong developers have been able to partly slow down price increases during the expensive loan period of the last couple of years, but now new homes will no longer be unaffected. “Input costs are rising noticeably and pressure to raise prices is strong, especially for new projects just entering the market. So the first price increase could happen as early as the first half of the new year,” Vähi explains, adding that developers’ and builders’ costs are also rising due to increasingly strict regulations. “Of course, the quality of new buildings is improving, but along with that, so are their costs,” Invego’s CEO clarifies.
Another factor raising new apartment prices is the upcoming VAT change this summer. “This 2% price increase is written into the law, and a simple calculation shows that the average price of a new apartment will rise by five to six thousand euros. Taking all of the above together, it’s clear that a price increase within the next six months is inevitable,” Kristjan-Thor Vähi predicts.