A block of flats in Kivistö, Vantaa, on 29 July 2021. (Mikko Stig – Lehtikuva)


HOUSE PRICES in Finland are rising at their fastest rate in 10 years, reports the Mortgage Society of Finland (Hypo).

Hypo on Friday forecast in its market review that house prices will increase by 5.5 per cent in the capital region and three per cent in the entire country in 2021. Juhana Brotherus, the chief economist at Hypo, said the market is showing many global signs of an upswing, such as houses selling above listing prices and buyers submitting their offers blind.

“In the United States, up to two-thirds of buyers submitted offers without seeing the house in the early parts of this year. In Finland, this has previously been a practice for investors, but now also regular buyers have joined the trigger-happy group,” he described.

Brotherus encouraged buyers to take their time to inspect the house, review documents on the housing company and familiarise themselves with the shareholder structure before making their decision.

“Rushing into a mistake purchase will gnaw away at you more than one house slipping through your fingers,” he reminded.

A new feature of the market, he revealed, are so-called love letters sent to sellers at the behest of brokers in an attempt to convince them to sell to a specific buyer. “Making a case for a candidate is common in the rental market, but in the house market euros have previously done the talking instead of flowery sentences,” he commented.

Hypo stated that it does not expect interest rates in the eurozone to rise significantly in the next couple of years. The housing loan market is in an unusual situation, with interest rates and margins on housing loans lingering below the one-per-cent mark for an extended period of time, according to Brotherus.

“The real interest rates of housing loans have fallen into the red, and the situation is not expected to change in the coming years. While inflation wrote off student loans in the 1970s, in the 2020s it is gnawing away at housing loans,” he said.

Another new market feature is less pronounced seasonal variation, told Juho Keskinen, a junior economist at Hypo.

“It used to be that house prices fluctuated markedly over the course of a year, as people pulled back to enjoy their holidays in July and prepared themselves for the new year in December. Transactions are currently coming in more evenly around the year, and people considering selling their house will no longer get the same kind of benefits by trying to time the sale to the peak season,” he said.

Hypo also reiterated the assessment that the coronavirus pandemic has not had a massive impact on the location wishes of buyers, although it has prompted people to look for more floor space. The majority of demand, it highlighted, is targeted at the corners of the so-called growth triangle: Helsinki, Tampere and Turku.

The rental market has continued struggling to keep pace with the price developments, despite the possibility of higher education institutions resuming in-person teaching early in the autumn.

Brotherus revealed that rents have fallen even further behind house prices than official statistics indicate at a glance, as the statistics do not include rents paid to private lessors without housing subsidies, which are presently subject to the fiercest competition.

Aleksi Teivainen – HT