Due to the continued high rate of inflation, rental prices, which have been rising since last spring, are set to continue this upward trend through 2022, particularly in Estonia’s two primary cities, Tallinn and Tartu, some experts say. Rentals in smaller towns will see a more modest rate of rise this year, though could even then reach double figures in places.
Mihkel Eliste, a real estate analyst at major dealers Arco Vara, said that last year’s rental rise was higher than forecast, adding that: “It cannot be ruled out that this year we will underestimate the growth of both rental prices and purchase and sale transactions.”
“It can be expected that the relatively rapid growth of rental prices will continue throughout this year. In the first half of the year, this could be relatively similar to the second half of last year, i.e. a rise of 10% to 15%. I would expect it to remain at 10% in the second half of the year too,” Eliste continued.
Rental apartment supply started to dwindle in April, as the economy started to recover from the worst of the Covid crisis and its effects, over a year after the pandemic began, and renters started looking for short-term accommodation again.
The rise in rental prices started in the spring after the economic recovery, the high inflation associated with the rise in energy prices is now also keeping pace with the rise in prices.
As of 2021 end the on-year price rise stood at 15%, while this looks set to continue in 2022, broadly similar to, or somewhat faster than nominal wage growth, and most likely ahead of overall inflation, Eliste added.
Students on fixed rentals at University of Tartu halls of residence at least do not have to worry about a rise in prices just yet.
Liina Kuusik, a development specialist at university’s student village, said: “Current lease agreements are valid until the end of June. The prices will therefore definitely remain the same. It is still too early to say whether or what any price increase after that will look like.”
Tallinn University of Technology (TalTech) and the Estonian University of Life Sciences (Eesti Maaulikool) in Tartu also confirmed their students would not be facing a rental rise for the rest of the current academic year.
In smaller towns such as Haapsalu, Viljandi, Kuressaare or Rakvere, rental inflation is forecast to be lower, potentially 8% to 10% for 2022, Mihkel Eliste said. (ERR/Business World Magazine)
