Housing is most expensive in Tallinn and Tartu. This is a problem for many people. According to Eurostat, Estonia's real estate prices are high among Eastern European countries. They are also similar to Southern European prices. Buying a home is even more expensive in the Nordic countries, the Netherlands, and Germany. In Estonia, prices are high, but incomes are low.
Many people suffer from housing costs. According to a social survey, over 15% of people said in 2023 that the costs were too high. Real estate prices are rising rapidly in Tallinn, Tartu, and Pärnu. Over the past decade, both foreign and local investors have invested in real estate.
In Estonia, housing is cheaper in small towns and rural areas. However, there are few new homes and quality living spaces there. Cheap real estate is not good collateral. Pre-World War II housing is popular. For example, Kalamaja, Kadriorg, and Karlova are expensive areas. Wealthier people buy them at high prices.
Low-income people are at risk. They spend a large part of their income on housing. If they have to rent a home at market price or pay a bank loan, they may be overburdened. Taking out a mortgage is usually cheaper than renting in Estonia. The value of real estate grows over time. However, tenants accumulate little savings.
Anneli Kährik recommends that cities act more consciously with urban land use. Urban land should not go to developers cheaply. Long-term building rights could help lower prices. Non-profit organizations could also offer affordable rental homes. Owners of vacant properties should pay a tax.
In addition, Estonia could use various financing options. For example, public housing funds could help households who cannot get a bank loan. This would also help revitalize declining regions. Affordable housing should be planned in new developments to reduce segregation.