HOUSE PRICES in Finland will decline this year at a rate not seen since 1993, forecasts the Mortgage Society of Finland (Hypo).
Hypo on Thursday published its latest real estate market review, revealing that it expects house prices to fall by seven per cent year-on-year nationwide – to the level of 2016 – and by eight per cent in the capital region – to the level of 2019.
The price drops continue to be explained by rising interest rates, solid supply of new residential units and the effects of lingering economic uncertainty on demand for real estate. Euribor rates, for example, are expected to stay close to the four-per-cent mark and continue to raise the costs of mortgage borrowers until the end of the year, even though the most dramatic jumps have already been witnessed.
The slowdown of the real estate market will also have an impact on public finances, as revenue from the transfer tax are expected to drop by 200 million euros in 2023, according to Hypo.
The Finnish credit institution specialised in housing viewed that making additional repayments on housing loans has become a great form of saving for the first time in a while. The situation, it added, also continues to present excellent opportunities for first-time home buyers.
“Plenty of houses are presently available, enabling people to take their time and negotiate prices while looking for their own home,” its forecast reads.
“What felt like a perpetual rise in prices has been interrupted, but the majority of home owners in growth centres are still ‘up’ on their home investment. And even if you had to sell your current home at a loss, […] you can make a deal where you save more than you lost when you swap to a larger home.”
Hypo revealed that it expects house prices to start rising modestly at the end of the year, although the rise is conditional on the recovery of demand.
“An increase in demand, pronounced decline in the number of newly built residential units and the petering out of interest rate development will lend support to house prices next year,” it estimated.
The housing supply is forecast to contract for cyclical reasons, interest rates to peter out and house prices to start rising in population centres as soon as next year. The developments are expected to drive up house prices by roughly two per cent.
The Russian war in Ukraine, however, continues to create significant uncertainty around interest rate development, reminded Hypo.
Aleksi Teivainen – HT