While studio flat prices in Helsinki have increased by 27 percent, prices outside the Helsinki Metropolitan Area have only increased by 0.5 percent. Since 2015, home prices have been rising only in Pirkanmaa, North Ostrobothnia, Uusimaa, and Southwest Finland.
The coronavirus situation could be seen in falling home sales volumes during the spring, but the situation has quickly returned to normal. Volumes have already reached last year’s levels, and OP’s economists believe that this year, home prices will increase by about one percent compared to last year.
The highest increases have been seen in the prices of small flats. In some five years since the beginning of 2015, studio flat prices have increased by 15 percent nationwide, whereas the prices of three-room flats and larger homes have only increased by 9 percent. In Helsinki, studio flat prices have increased by as much as 27 percent since the beginning of 2015. Outside the Helsinki Metropolitan Area, studio flat prices have only increased by 0.5 percent during the same period.
“People often think that the prices of small flats are rising in the whole Helsinki Metropolitan Area, but the highest increases are seen specifically in studio flats in Helsinki. In fact, in other parts of the Metropolitan Area, prices seem to develop at a similar pace with larger homes. In Helsinki, there is a demand for studio flats in particular, but there have been signs of late that interest in larger homes is increasing, too”, says OP’s economist Joona Widgrén.
Helsinki is also a favored location for property investors. According to the estimates of Statistics Finland, around every fifth buy-to-let studio flat sold last year was in Helsinki. After Helsinki, the biggest hubs for buy-to-let homes are Tampere and Turku.
Small flats in Helsinki also cost more compared to the buyers’ level of income than elsewhere in the country. Finns’ average monthly earnings will buy 0.4 square meters of a studio flat in Helsinki, while in the rest of the country the corresponding figure is 0.9.
“Even though it looks like the gap between the prices of studio flats and larger homes is increasing at a slower pace than during the previous decade, the gap is still growing steadily. There is a significant difference in the price levels of small and large homes,” Widgrén says.
Prices are up in four regions
The highest increase in the prices of old owner flats between July and September could be seen in Helsinki (+4.6 percent) and Tampere (+4.2 percent). In the Helsinki Metropolitan Area, the prices of detached houses also began to rise at the beginning of 2019, but this development seems to have halted. Next year, OP’s economists estimate home prices to increase at a moderate rate of 1.5 percent. Home sales volumes have developed favorably and are expected to remain good for the next year.
“Continued economic recovery will boost the housing market during the final months of this year as well as next year. The market is also positively affected by low-interest rates and consumers’ willingness to buy. However, in areas of negative net migration, weaker price development means that prices will continue to fall,” Widgrén says.
Out of all home sales, as much as half is made in six of the country’s largest cities: Helsinki, Espoo, Tampere, Vantaa, Oulu, and Turku.
Since the beginning of 2015, the prices of old owned flats have risen in only four regions: Pirkanmaa, North Ostrobothnia, Uusimaa, and Southwest Finland. Home prices have fallen in all other regions – in South Savo and North Karelia by more than 15 percent.
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