Estonia currently has just over 1.36 million residents. Over the past year, the population decreased by more than 9,000, and researchers forecast a continued steady decline.
“Over a period of about 20 years, assuming that immigration continues, the decline could be around 3 to 5 percent. If there were no migration at all, it could be as much as 8 to 10 percent,” Martin Klesment, a senior researcher and demographer at Tartu Ülikool, told Sunday’s “AK. Nädal”
Changes in population size will also begin to affect the real estate landscape. At present, a large generation — those born in the late 1980s, for example — is at the age when people typically buy homes.
“They are now at the stage of life when it is a good time to acquire real estate, perhaps to move into a larger apartment or house. In 20 years, due to demographic structure, the number of such people will be about 20 percent smaller,” Klesment said.
One might assume that the lower the demand in the market, the cheaper prices will become. That is both true and not true. However, prices are likely to fall only in areas where people do not want to live. Population studies show concentration in three main regions.
“People are gathering in Tallinn, its surrounding area, Tartu, its surrounding area, and to some extent Pärnu, and that’s about it. All other places are declining,” said Hannes Palang, professor of human geography at Tallinn University.
Real estate analyst Tõnu Toompark told the show: “We can already see today in Estonia how there are regions where people have left. The housing supply remains, and we can buy an apartment in Kohtla-Järve for €2,000, while in Tallinn’s Noblessner area we might get a quarter of a square meter for the same money, if that.”
If currently 47 percent of Estonia’s population lives in Harju County, then by 2050, more than half will live there, meaning housing prices will continue to rise. However, due to an aging society, the question arises: what kind of housing will we prefer in the future?
“Single-person households have actually been steadily increasing over the past 25 years. Demand is higher for somewhat smaller living spaces. If we also consider that larger generations may, in retirement, want to move into smaller homes, then a situation may arise where demand shifts toward smaller, more economical housing,” Klesment said.
Looking at new developments, however, the real estate market is currently moving in the opposite direction. The city of Tallinn requires developers to build larger residential units. This means housing is being created for which demand may not exist in the same volume in the future.
“The city’s idea is that larger apartments are needed so that young people can buy them and live together, and if they have living space, they can also have children. Through its requirements, the city is driving up prices, and supply does not match demand,” Toompark said.
Accessibility is also becoming increasingly important.
“This does not only concern apartment buildings, but also directly affects private houses, whether a person can easily access their home,” said Sirle Salmistu, senior lecturer and urban planner at the TalTech’s Tartu College.
“I do not want to go to a place where I have to use stairs, climb a couple of floors, where there is no elevator, because I would be trapped there. If an elderly person lives on the fifth floor somewhere, who helps them and how do they get out?” Palang said.
This may also change the existing pricing logic. In buildings without elevators, apartments on lower floors may in the future be more expensive than those on higher floors.
“The general rule has been the opposite, that lower floors are cheaper, while higher floors offer a better view, less noise from people passing by the door, and therefore higher value,” Toompark said.
As the number of children declines, playgrounds will also become less crowded. Urban planners will have to start thinking about what to offer in neighborhoods for older residents, whose mobility is limited.
“A person may feel very comfortable in their home, but it is also important what their access is to essential services, such as shops, pharmacies, or other places, and this also brings in the issue of mobility and public transport,” Salmistu said.
In areas where residents rely heavily on personal vehicles, people may face difficulties. Meanwhile, neighborhoods that offer opportunities for social interaction will gain value.
“Some clubs, a community center, so that they have some kind of activity. Those who can manage will dance, those who cannot will sing. Those who cannot carry a tune can be set to knitting or some other activity, so that they have something to do,” Palang said.
All this means Estonia’s real estate market faces changes in the coming decades. While the focus has so far been on young families, an aging population is increasingly forcing a rethinking of the living environment.
“We tend not to pay much attention to elderly people in society. But we should think about them more, because that is the future for all of us,” Palang said.
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Source:
AK. Nädal
