The prices of single-family houses, on the other hand, are falling as the rise in energy costs suppresses interest in electrically heated properties.
Nordea paid particular attention to the slowdown observed in October. The Real Estate Association has reported that the number of real estate transactions was 23 percent lower than the monthly average of the past decades.
Home loan borrowers have also received good news when the rise in short and long interest rates stopped late in the fall. Nordea said that Euribor 12, the most common reference interest rate for home loans in Finland, will probably not rise as fast next year as it did this year and level off at three percent.
The housing market will face its biggest headwinds at the beginning of next year, as economic growth is expected to be the slowest.
Jussi PajalaThe director of Nordea Mortgage said that the Finns are well prepared for the headwind. He said that every seventh mortgage borrower has protected his loan against interest rate risk or has savings or other assets that enable him to survive the difficult months.
– Short-term holidays also offer flexibility, and their utilization rate remains below the long-term average, he added.
First-time home buyers could benefit from the market situation, as the high supply of one- and two-story apartments and the drop in prices make it possible to weigh options more thoroughly than before. A positive aspect of the big picture is that the economic recession is expected to be short and the outlook for the housing market is brighter for the end of next year.
Nordea also downplayed concerns that the exceptional market situation could lead to a collapse like the 1990s. Analyst Antti Koskivuo reminded that the economy is currently sliding into recession due to inflation and the energy crisis, unlike in the 1990s and during the financial crisis of 2007-2009.
“Finland or the world economy is not faced with a structural problem similar to previous crises, which is why a possible recession is likely to be moderate and widespread unemployment is not expected,” he explained.
“Strong employment supports the current real estate market situation, even if the development cools down moderately in the coming months.”
Interest rates also remain below the five percent limit of the financial crisis and well below the double digit figure of the 1990s. Current interest rates may prompt borrowers to cut other expenses instead of putting their home on the market.
Nordea announced that it expects the rental market to stabilize gradually. As the sale of new apartments slows down, at least some of the unsold ones will probably flow into the rental market, it explains.
“Demand for rental apartments is increasing and the number of rental announcements has decreased. Interest in rental housing is increasing because rents are rising less than the costs of owning housing. However, a broad-based transition from owner-occupied housing to rental housing is currently not in sight, Pajala said.
Aleksi Teivainen โ HT
Source: The Nordic Page