Blocks of flats in Sörnäinen, Helsinki, on 28 August 2023. Three of Finland’s leading real estate brokerages registered significant year-on-year increases in sales in November, reports YLE. (Lasse Hendriks – Lehtikuva)

Domestic
Tools
Typography

NOVEMBER was the best month of the year for a number of real estate brokerages, reports YLE.

The Finnish public broadcasting company reported today that the sales of old homes increased by almost 20 per cent year-on-year at Kiinteistömaailma, 15 per cent at Huoneistokeskus and 14 per cent at OP Koti.

Topi Salmi, the executive director at Huoneistokeskus, revealed that market activity picked up especially in growth centres such as Espoo, Helsinki, Tampere and Vantaa.

One factor contributing to the acceleration of sales is that first-time home buyers will no longer be exempt from the transfer tax as of the start of next year. Juho Kostiainen, an economist at Nordea, told YLE that first-time home buyers have had a key role in rejuvenating the market along with disinflation and the stabilisation of interest rates.

The scrapping of the tax exemption is also having an impact on other home buyers, he believes: Sales can clog when many people submit offers that are conditional on their ability to sell their current home, meaning that a purchase made by a first-time home buyer can trigger a chain of purchases.

First-time home buyers are on the market not only for small flats, but also for detached and terraced homes.

Lasse Palovaara, the director of OP Koti, revealed that the real estate brokerage registered a year-on-year jump of 42 per cent in the sales of detached homes in November. The buyers, he added, also included first-time home buyers.

“This shows that first-time home buyers are interested in all types of homes. They aren’t […] always buying small, one or two-room flats,” he said to YLE.

Although the market is presently hot, he recommended that both buyers and sellers keep a cool head.

“You shouldn’t rush into buying or selling a home. Instead you should consider things very calmly and be patient. I personally don’t want to convey the message that this is the last chance to buy at a low price,” he commented.

The house market is presently a buyer’s market, with supply exceeding demand and house prices falling sharply for more than a year. Palovaara believes a rebound in home prices is imminent, however.

“Typically the mechanism is that prices start returning to a modest upward trajectory once sales volumes start growing and demand starts emerging,” he explained to YLE.

Also Kostiainen estimated that the decline in home prices is coming to an end, although future developments will to some extent depend on interest rates.

Demand is not as high for newly built homes, however.

“The price level is typically higher for newly built units, and so first-time buyers are looking specifically in the second-hand market. It may take a bit more time until the sales of newly built units pick up,” analysed Palovaara.

Salmi from Kiinteistömaailma told YLE that the ongoing challenges of residential construction could have an impact on the house market in one-and-a-half years, possibly leading to the overheating of the second-hand market.

Although the experts interviewed by the public broadcasting company believe the house market has hit its low point, sales may be inhibited early next year by slowing economic growth and a decrease in the number of first-time home buyers.

“On the negative side, we’re seeing that economic growth is slowing down. Usually that means that unemployment will increase slightly and could weaken the house market to some extent,” summed up Kostiainen.

Aleksi Teivainen – HT

Partners