Estonia

As of 2025, Estonia’s housing market is characterized by high home ownership: about 79.3% of the population owns their home, while approximately 20.7% rent. The average price per square meter to purchase an apartment varies widely: in Tallinn’s primary market it is around 4,540 euros, and in the secondary market 2,871 euros; outside major cities, it can be below 750 euros per sqm. Rental prices for long-term leases in Tallinn are reported at about 8,000 euros per year for a 2-bedroom apartment, which equates to roughly 11–14 euros per sqm per month, though prices can vary across the country.

Publicly owned housing (municipal and social housing) represents a small segment, serving primarily vulnerable or low-income groups. The public rental housing stock is generally limited and often of lower quality, relying mainly on residual units from earlier privatization. Municipalities define eligibility, with social housing providing additional support services for high-need individuals, while public (municipal) housing may be offered to broader low-income groups. Thus, in the city context, public housing is not always synonymous with social housing: social housing includes care or support services, while municipal (public) rental housing serves as affordable accommodation and may not include such services. Overall, public and social housing combined account for a marginal share of the total housing market, well below the EU average.

Estonia’s housing crisis is driven by rapidly rising prices, limited affordable rental options, and widening inequality. National house prices grew by 7.8% year-on-year in early 2025, after a decade of accelerated growth averaging 8% per year. This surge, combined with volatile economic conditions and sharply reduced sales transactions, has made access to decent housing harder for many, particularly in urban areas.

Young people are disproportionately affected: declining affordability and limited rental supply force many to rely on parental homes or insecure private rentals well into their 30s. Nearly twice as many young urban dwellers report being overburdened by housing costs compared to older generations. Vulnerable groups, including single-parent families, pensioners, unemployed households, disabled persons, and those on the lowest incomes, face greater barriers—often residing in poor-quality or unstable accommodations and are at higher risk of homelessness. Ethnic minorities and low-education groups also experience exclusion due to labor market disparities and lower ability to access mortgage finance.

Most public housing is mainly residual stock from privatization, of low quality and insufficient to meet demand, especially in major cities. Socially disadvantaged and low-income groups are often restricted by strict eligibility rules for municipal or social housing, amplifying social exclusion and risk of homelessness. Persistent inequalities in wealth transfer, employment, and education further entrench the crisis for younger and vulnerable populations.

Estonia’s national government addresses affordable and sustainable housing primarily through incentivized renovation programs and support for new rental development, focusing both on maintaining energy efficiency and expanding rental supply. The 2024 initiative dedicates 185 million euros for renovating around 400 apartment buildings to improve 12,000 dwellings to at least energy class C by 2027. Past rounds since 2021 already invested over 105 million euros, upgrading 375 buildings. New construction and deep energy retrofits often require buildings to meet class A or C standards, aiming to modernize stock and reduce energy bills.

Local governments outside Tallinn and Tartu can receive up to 50% national co-financing (maximum 1 million euros per round) for new construction or renovation of rental buildings. Rent levels are regulated, generally pegged to local market rates, with potential reductions for socio-economic target groups. Restrictions prevent these units from being sold or mortgaged (except for renovation loans) within 15–20 years. Estonia collaborates with the EU and European Investment Bank, including through the ELENA facility for energy renovations and pilot projects like “Ida-Viru Renovates.” Smart home and green features are increasingly incentivized, with green mortgages also available. Targets include full housing stock deep renovation by 2050 and scaling new, energy-efficient, and smart homes to boost both affordability and sustainability.

In Estonia, housing cooperatives mainly function as associations responsible for managing and maintaining apartment buildings—a legacy of the privatized housing system where much of the apartment stock is collectively managed rather than owned in the classical Western cooperative sense. The sector’s role is organizational rather than representing a major alternative tenure model: most existing “cooperatives” are condominium associations established after mass privatization, not new-build or community-driven cooperative housing. The true cooperative housing sector therefore remains limited in both scale and visibility.

Recent development in cooperative housing is relatively stagnant, with activity centering on energy efficiency renovations mandated by EU standards and national policy. These cooperative-like associations have become key facilitators for building retrofits, especially through collective applications for renovation and EU or state subsidies, but they seldom pursue new non-market or alternative tenure initiatives.

There are no significant recent statistics indicating that housing cooperatives represent a measurable or growing share of the national housing stock; the proportion is marginal and not a distinct tenure form within Estonian housing data. State policy primarily promotes cooperative housing indirectly, via renovation grants, energy efficiency programs, and regulatory requirements encouraging apartment associations—not by explicitly expanding cooperative tenure or new cooperative developments. This leaves Estonia’s cooperative sector static, focused on building management and renovation, without notable expansion as an alternative housing model.