Estonia

In Estonia, the housing market is experiencing a mix of growth and challenges. As of 2024, the home ownership rate was 79.3%, leaving about 20.7% of the population renting their homes. Recent data shows a 7.8% year-over-year increase in house prices, with apartments in Tallinn averaging €3,084 per square meter. Publicly owned housing plays a crucial role, particularly in providing social housing. However, the supply of affordable public housing is insufficient, especially in major towns. Public housing is often not of high quality and is mainly allocated to socially disadvantaged groups. While public housing and social housing are not entirely distinct, social housing typically includes additional social services, making it a more comprehensive support system for vulnerable populations. The median price to rent an apartment varies significantly across Estonia, but specific figures are not readily available. The price to rent ratio is high, indicating that renting might be more affordable than buying relative to income. Public housing accounts for a small share of the overall housing market, with a focus on providing support to low-income and vulnerable groups. Modular and prefabricated housing are being explored as solutions to enhance affordability and efficiency in social housing projects.

Estonia is experiencing a significant housing affordability crisis, marked by rapidly rising home prices and growing inequality in access to housing. In the first quarter of 2025, house prices rose by 4.6% year-on-year and apartment prices in Tallinn reached up to €4,000 per square meter. Over the past decade, the cost of purchasing or renting a home in Estonia increased faster than in many other European countries. Transaction volumes, however, have declined by 6.5% in early 2025 compared to the previous year, reflecting broader market pressures. The impact is especially acute among young people, who face barriers to homeownership due to high prices, limited access to mortgages, and lower wages compared to older generations. Between 2010 and 2020, the homeownership rate for young people in Estonia declined, with the proportion of renters among this group increasing from one-third to one-half. The gap in homeownership accessibility between younger and older residents widened by 10% over that period. The private rental sector operates largely in an informal market, often with insufficient regulation, further challenging affordability and security for younger and lower-income groups. The crisis affects not only low-income households but now also extends to middle-income earners, particularly in urban centers where demand far exceeds supply. The commodification of housing, with increased investment buying, has exacerbated socioeconomic inequality and made it difficult for many average wage earners to find suitable homes.

The Estonian national government is addressing affordable and sustainable housing primarily through significant funding for energy-efficient renovation and by encouraging sustainable construction. In 2024, Estonia launched a 185 million euro support program aimed at renovating around 400 apartment buildings and improving 12,000 dwellings by 2027 to achieve higher energy efficiency. This follows earlier initiatives that renovated 375 buildings and upgraded over 11,000 dwellings to improved energy classes. The government incentivizes sustainable housing through partnerships, such as the LIFE IP BuildEST project, which raises public awareness and supports eco-friendly building practices. Estonians can access “green mortgages” with favorable terms for investing in or upgrading to energy-efficient homes, facilitated by banks in cooperation with government policies. Recent national targets focus on accelerating the renovation rate of the housing stock, particularly multi-family buildings, and improving their energy performance. The overarching goal is to ensure a higher proportion of homes meet modern efficiency standards and to reduce household energy costs. These measures reflect Estonia’s strategic pivot to support both affordability and environmental sustainability. At the city level, especially in Tallinn, new policy proposals emphasize strategic planning, diverse public-private partnerships, and targeted interventions to expand access to affordable dwellings. Local authorities are recommended to tailor solutions to district-level needs and support a diverse housing stock, but most large-scale funding and renovation incentives are driven at the national level.

In Estonia, housing cooperatives—primarily known as apartment associations—play a unique and large-scale role in housing management. Unlike in many European countries, the creation of a cooperative or association for each multi-apartment building was made compulsory during the rapid privatization of the 1990s. Today, about 96% of all apartments in Estonia are privatized and almost all are managed through such associations or cooperatives. However, these cooperatives do not typically develop or own dwellings collectively; instead, they are non-profit organizations that manage common areas on behalf of their owner-members, who individually own their units. The cooperative housing sector is thus deeply embedded in the housing fabric, covering almost the entire stock of multi-apartment dwellings. This is not the same as the classical Western European model of limited-equity or social co-op housing, but rather a system for collective self-management. Current dynamics focus on energy efficiency upgrades and large-scale renovations, as much of the housing stock is from the Soviet era and in need of significant investment. The state supports these efforts through renovation grants, low-interest loans with municipal involvement, and programs targeting energy efficiency. National housing policy encourages the modernization and maintenance of this stock but does not specifically promote new cooperative housing development beyond the established self-management model. There are no significant government programs aimed at expanding cooperative housing as a means of tenure or ownership, as almost all multi-apartment housing already operates under this collective management system.

In Estonia, the Estonian Union of Co-operative Housing Associations (EKYL) is the leading organization advocating for tackling the housing crisis and promoting affordable, sustainable housing. EKYL represents over 1,400 apartment associations and plays a central role in shaping housing policy, supporting energy-efficient renovations, and disseminating best practices. As a Geneva UN Charter Centre of Excellence on Sustainable Housing, EKYL coordinates national and international cooperation among housing stakeholders and is a key academic, NGO, and policy partner for any initiative focused on affordable and sustainable housing. Potential collaboration partners include: - From academia: EKYL’s own Training Centre for Apartment Associations provides housing management education and could connect with universities focused on urban studies or engineering. - From the real estate sector: Local apartment associations and property management firms, which work closely with EKYL and are involved in most urban housing projects. - From the startup world: While specific Estonian housing startups are not named, the country’s active technology sector and interest in smart, energy-efficient renovations suggest startups in proptech and green construction would be relevant. - From the NGO sector: EKYL itself is a primary actor, but cooperation with other civic organizations focused on social issues, energy poverty, and community development would also be beneficial. Tallinn city authorities are engaged in strategy and district-level solutions for affordable housing, but coordination with EKYL and sectoral partners is considered essential for impactful, large-scale change.