Businessman: I would wait 12 months before buying a property | New

“Looking at other economies, like Canada or Australia, which are ahead of us in raising interest rates, their housing markets are in decline. But that doesn’t mean a collapse, just a correction in prices. SEB expects prices in neighboring Sweden to also fall by 15-20% as interest rates rise after climbing for 30 years,” Arakas suggested.

He added that the situation in the real estate market had been thoughtless for some time and could be compared to a few minutes before a thunderstorm started and cleared.

“At the moment, the ‘no shame in asking’ principle reigns. This will end, while we will not see a repeat of 2009-2010 either. Of course, prices have also increased for developers after the crises of Covid and Ukraine. But the river is not so fast anymore. The number of transactions is falling, while this will be reflected in the statistics a year later. Overall, this benefits the real estate market because an arduous race does not can’t be good,” the businessman said.

He added that the biggest change will be moving expectations to where they should be. This will affect rational buyers less and emotional ones more.

“We live in a consumer-centric society, and that’s one of the most important economic indicators. era and turn off the silver hits again.The extra silver hitting the market created the current situation.

Arakas’ calculations suggest that 10 billion euros of mortgages have been sold in Estonia, and that Euribor hitting 2% would result in another 200 million euros being levied on bank customers.

“But the effect of soaring energy prices is tenfold. It is suggested that households could spend 1/3 of their income on housing. I think it will be very different this winter.”

The businessman added that he would postpone buying a house for 6 to 12 months in the current situation.

“I belong to the camp that sees the potential for a small price drop. The price per square meter will not drop from €5,000 to €2,000, but even a drop to €4,000 would be a clear winner.”

Arakas said prices for private residences have moved behind apartments. The price gap between apartments and residences could rise again after the market adjustment.

He added that modular home makers who can offer off-the-shelf solutions might find the situation to their advantage.

Asked if banks might consider cutting their profit margins, Arakas remained skeptical. “With a negative outlook at home (Sweden – ed.), SEB and Swedbank are unlikely to view the Estonian market with optimism,” he said.

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