don’t delay buying a home

Illustrative photo. A photo: Andras Kralla

The geopolitical situation has created uncertainty both for the global economy and for individuals. As a result, many potential homebuyers may want to put their plans on hold. However, experts say that from an economic point of view, it is not worth abandoning the purchase plans.

While many people are probably wondering if now is the right time to buy a home, Tanel Rebane, Head of Retail Banking at Luminor, says that any time is right for buying a home: “It doesn’t. So if you’re already thinking about buying a home, it’s worth going through with it. Currently, construction and raw material prices are rising, so buying a home won’t get any cheaper.”

While turbulent times and supply issues have delayed the completion of some projects, experts say there are currently no signs of any major negative developments in the real estate and construction sector. According to Luminor’s chief economist Lenno Uusküla, the supply of new buildings may decline somewhat in the near future, but there are no signs of a general decline in construction volumes. “Therefore, I believe that there will be no shortage of work in the Estonian construction sector in the near future,” Uusküla said.

He added that some construction contracts are likely to be rescheduled due to supply issues and some projects may be put on hold, but overall there will not be a sharp drop: “If there are no more steel structures, then timber structures will be used. or the focus will be on refurbishment and energy efficiency.” Uusküla noted that new properties could rise in value faster than older properties as there are currently fewer new developments being planned.

He added that the gap between the average salary and the price per square meter of real estate has widened in Tallinn and Tartu, which makes real estate less affordable for residents of large cities. “This is particularly affecting first-time home buyers, including, for example, graduates who have just entered the labor market and are still saving money for a down payment. If you now have the desire, opportunity and suitable housing, there is no point in postponing solution,” explains Uusküla.

According to Rebane and Uusküla, when obtaining a loan for the purchase of housing, one should also take into account the possible increase in the Euribor rate, which will lead to an increase in the cost of monthly loan payments. If the loan was taken earlier, Uusküla said the recent wage hike has made it easier for people to repay the slightly more expensive loan.

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