The sales of newly built houses fell in Finland between April and June. The number of sales plummeted by 45 per cent year-on-year, with Oulu the only locality to register an increase. (Hanna Matikainen – Lehtikuva)

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A BAFFLING TURNAROUND has occurred in the real estate market in Helsinki, reports Helsingin Sanomat.

Statistics Finland on Friday published preliminary data indicating both that the prices of small houses have begun to decrease and that the price increases of houses of all sizes have slowed down in the capital region.

In June, the data shows, the prices of one-room dwellings in housing companies fell by by 1.2 per cent year-on-year in Helsinki and by 1.9 per cent year-on-year in Greater Helsinki. The prices of dwellings with at least three rooms, by contrast, crept up by 1.4 per cent in Helsinki and by 2.1 per cent in Greater Helsinki.

Increases in the prices of dwellings in old housing companies decelerated to 0.5 per cent in not only the capital region, but also the six largest cities in Finland. The prices plunged by five per cent year-on-year in Turku but rose by 4.5 per cent in Tampere. The prices rose more than average outside the six largest cities, by 2.7 per cent from the previous year.

The prices of dwellings in new housing companies increased by 3.2 per cent year-on-year in the capital region. The prices of terraced houses rose by 1.9 per cent in the capital region.

Statistics Finland also reported that the sales of new houses slowed down substantially in the region, falling by 65 per cent from 1,122 in the second quarter of 2021 to 383 in the second quarter of 2022. The slowdown was even more dramatic in Helsinki, with the sales plummeting by 71 per cent year-on-year from 444 to 128.

Nationwide the sales of new houses decreased by 45 per cent from the previous year between April and June, with Oulu the only municipality to register an increase in the number of sales.

Risto Kyhälä, the managing director of Kiinteistömaailma, told Helsingin Sanomat that several factors explain the downward trend in the prices of one-room houses and the slowing upward trend in the prices of larger houses.

People looking for a rental house have become more quality-conscious and started to turn down houses that are poorly equipped or in poor condition. The demand for older small dwellings has consequently decreased, resulting in a rise in the supply and drop in the prices of older small dwellings.

Demand for small houses in the capital region had already been dented by the coronavirus pandemic, and it has yet to recover to pre-pandemic levels.

Consumer confidence, meanwhile, has eroded to record-low levels and is inevitably affecting real estate sales regardless of house size, according to Kyhälä. Another factor prompting people to reconsider their plans is the increase in the cost of living.

“We’ve experienced unprecedented increases in house prices in large growth centres, and now we’re in a situation where prices have hit their peak relative to purchasing power,” he summed up.

Kyhälä added that demand has persisted for modern and energy-efficient houses built no earlier than in 2005 that make use of new energy solutions, such as solar power or geothermal heating. Older houses, however, are regarded as a challenge because the rising cost of living is tangible particularly in old houses.

The decline in the prices of one-room dwellings could benefit people with sound finances who are considering buying their first smaller house, he estimated.

“The prices of newly built dwellings have risen due to an increase in construction cost, and construction is becoming more and more difficult in the current market situation,” commented Kyhälä.

Aleksi Teivainen – HT

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