EXPERTS agree that house prices are likely to decline in Finland in 2023, reports Helsingin Sanomat.
The Mortgage Society of Finland (Hypo) on Friday released its latest real estate market review, forecasting that house prices would fall by three per cent in the capital region and two per cent in other parts of the country in 2023.
Ilkka Lehtinen, a retired actuary at Statistics Finland, told Helsingin Sanomat that the forecast may be overly cautious.
The sales of old dwellings in housing companies, he stated, added up to 49,000 in the first three quarters of the year, matching the level of 2019 but falling roughly 14,000 sales short of the first three quarters of 2021. The yearly total should fall short of 70,000, a drop of 13,000 from 2021, according to him.
“The number of transactions will worsen toward the end of the year, and it’s not looking good for early next year either. That means the number of transactions will fall clearly also next year,” he analysed. “It looks like market activity will freeze quite notably next spring and prices will drop to some extent. What happens after the spring is another matter.”
Lehtinen is therefore expecting the house market to turn into a buyer’s market in 2023.
“If there’s no demand – people don’t want to or dare to buy – it’ll naturally result in a drop in prices in normal circumstances. The situation right now is good in the sense that people have jobs and we won’t see the kind of forced sales that we did in the 1990s,” he said to the newspaper.
Hypo believes the decline in prices will be a short-lived phenomenon, with a return to an upward trajectory expected in 2024 as interest rates stop rising and construction slows down amid economic uncertainty. Lehtinen, though, reminded that making long-term forecasts about the house market is a challenging task.
“It’ll depend entirely on how the Finnish, European and global economies fare at the end of next year,” he stated.
“It it looks like there’s a rejuvenating injection, Hypo’s forecast could very well hold true. But it’s very difficult to start making predictions in this global situation about what the situation will be like then.”
Teemu Lyytikäinen, a senior researcher at VATT Institute for Economic Research, declined to comment on the forecast but estimated that house prices are likely to fall in 2023.
“The prices are determined by the combined effect of demand and supply. When interest rates rise, it reduces demand for houses. Interest rates are an important factor moving house prices, and as interest rates rise prices tend to drop,” he summed up.
Aleksi Teivainen – HT