Baltic property prices to fall further

Country:  Estonia

6 May 2008

Property prices in the Baltic States are only at the beginning of a downturn that could last for several years, says Paul Oberschneider, the founder of estate agency Ober-Haus.

Following years of robust Baltic property price growth, average home prices in Tallinn, Estonia, fell by 14.5% in Q4 2007, compared to the corresponding time in 2006, according to the Global House Price index compiled by Knight Frank. The report also revealed that that property prices in Riga, Latvia, and the Lithuanian capital of Vilnius, fell by 7.1% and 0.9%, respectively.

While some Baltic market analysts think that this price correction is a short-term blip, Oberschneider believes that the dip in the market could be long lasting.

Oberschneider said: “We are perhaps at the beginning of a long, protracted decline rather than in a knee-jerk correction… For a correction to fully occur, it may take several years, as prices come back to a normal equilibrium point.”