Finland’s housing market may slow down for the first time since 2005
In the last quarter of this year, the housing market in Finland showed an increase of about 2.9%. By comparison, during the same period in 2021, the increase in the price of houses and apartments was approximately 3.7%. In quarterly terms, real estate prices rose by 5.8%.
According to the Bureau of Statistics, last year the secondary housing market had 55,845 transactions, which is almost 18% higher than the previous year. However, this year the demand for older homes declined by 2.2% and amounted to 8,255 transactions.
The number of residence permits issued has also decreased, with a total of 22,038, which is 15.3% less than was recorded last year.
A square meter of an apartment in Helsinki costs 6,600 euros. Housing in the center of the capital of 120 square meters will cost about 793 080 euros. At the same time, the rent for such an apartment is about 2,720 euros per month, which means that the property yield will be at a level of 4.1% per annum.
As for the economic development of Finland, during the current period, there was recorded a growth of 2.3%. According to the forecasts of the Ministry of Finance, the country’s economic development will decrease to 1.4% by the end of the year. A slowdown is also expected in 2023, here the dynamics will be at 1.1%. The main reasons for the decline of growth are the increase in energy prices and global processes affecting the domestic market.
Finland, like most countries in the world, has raised interest rates to slow inflation. However, such measures put pressure on the population, reducing its purchasing power. Prices are rising not only on consumer goods, mortgage rates are rising, making it impossible for many citizens to buy their own homes. Such trends affect the dynamics of real estate prices, and experts expect them to decline. A decrease in home prices is predicted for next year, and if it happens, it will be the first time since 2015.
Positive dynamics at the beginning of this year support the growth of the cost of objects, but in 2023 you can see a drop in housing prices, which will affect all regions of Finland.
Since June, the real estate market in the country is gradually slowing down, and it will become more noticeable by the beginning of next year. Since August, experts note the fall in apartment values in the capital and six major cities in the country. And the decline is observed not only in the secondary housing market but also in new construction. In general, in Finland, prices for new construction sagged by 65%.