Due to the strong start to the year, house prices will rise by 1.5 percent this year, but will fall by 0.5 percent next year.
The good employment situation and the financial buffers built by households are the main factors supporting the market from the effects of rising interest rates, weakening purchasing power and the scrapping of support mechanisms caused by the pandemic. A turn in the employment situation for the worse can cause house prices to drop quickly.
“If the economy slows down into a deep recession and the labor market stagnates, it will be a freezing period for the housing market,” said. Juhana BrotherusHypo’s Chief Economist.
On the other hand, the real prices of apartments will fall regardless of the employment situation, as inflation and salary increases are expected to exceed the rise in rents and real estate prices in the next few years.
Hypo also predicts that housing prices in the capital region will develop more slowly this year for the first time since 2008 than in the rest of the country, falling by slightly more than one percent in the next six months. However, the annual development continues to be positive thanks to the region’s strong start to the year.
Apartment prices in the area will rise by one percent in 2022 and half a percent in 2023.
The number of real estate transactions in the region decreased by 11 percent in the second quarter of the year. Prices, on the other hand, were about one percent higher, although the prices of studio apartments fell by almost two percent.
In addition to the downward trend in the prices of small houses, historically high housing construction and high interest rates are expected to keep prices under control in the capital region โ the latter is due to its relatively large impact on housing prices and thus mortgages are higher than average.
Real estate prices in Tampere are also predicted to slow down, although according to Hypo, earlier this year the city recorded the highest net migration profit in a quarter of a century. Brotherus and Juho KeskinenHypo’s economist emphasized that it is positive that the capital region is not the driver of growth in Finland.
Floating prices are not expected to become a trend in Tampere or Turku. While in the cities the amount of sales decreased by more than nine and five percent in the spring, prices rose five percent in Tampere and fell marginally in Turku.
Brotherus predicted that winter will come early to the real estate market, when rising interest rates burden borrowers and rising consumer prices eat away at the purchasing power of consumers in Finland.
The telecommuting boom that raised prices surprisingly significantly is also fading.
Housing prices in the capital region have risen by eight percent during the pandemic, and by six percent in the rest of the country. The prices of larger houses rose especially in growth centers and in their surroundings, households of knowledge workers are looking for more floor space for their remote work arrangements.
“Remote work will certainly remain part of the daily lives of knowledge workers in cities, but not as dominant as it was during the two extraordinary years,” he said.
Aleksi Teivainen โ HT
Source: The Nordic Page