An aerial image of blocks of flats in Kaleva, Tampere, on 3 October 2024. The International Monetary Fund studied the development of real house prices across the OECD, finding that the development has been the worst in Finland. (Heikki Saukkomaa – Lehtikuva)
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HOUSE PRICES in Finland have developed worse over the past decade than anywhere else in the OECD, according to the International Monetary Fund (IMF).
Helsingin Sanomat on Wednesday reported, citing a recent study by the international financial institution, that real house prices in the country have decreased by 13 per cent since 2015, whereas they have increased by an average of 37 per cent across the OECD.
Alongside Finland, Italy and South Korea were the only other industrialised countries to record a decline in real house prices. Iceland, Portugal and Hungary have contrastively seen the prices surge by over 65 per cent in the past 10 years. In the United States, similarly, real house prices have risen by more than 50 per cent.
In Finland, the fall has been particularly sharp since mid-2022. Experts have largely attributed it to two key factors: the location of houses in depopulating parts of the country and the impact of rising benchmark rates in a country where the vast majority of housing loans are tied to benchmark rates, most commonly the 12-month Euribor.
Helsingin Sanomat on Monday wrote that Finland has up to a million houses – a number that accounts for roughly a third of all houses in the country – that are located in regions where the prospects of a sale are grim due to depopulation. Some of the houses, it added, may be impossible to sell even in good economic circumstances and may not qualify for renovation loans from banks.
With Finns tying their wealth largely to houses, many to ensure financial security in old age, the issue is particularly pertinent.
According to Statistics Finland, houses have depreciated especially since 2020, in some areas by over 20 per cent.
“In the 2000s, real prices have fallen in all parts of Finland,” Petri Kettunen, a senior statistician at Statistics Finland, summed up for Helsingin Sanomat in May. “In the past four years, the price drops have been pronounced in Kainuu, nearly 30 per cent, and South Karelia, 27.8 per cent.”
The IMF analysis points to a reality that has been observed also by Eurostat. The EU’s statistical bureau has reported that nominal house prices across the 27-country bloc increased by an average of 47 per cent in 2010–2023. In Finland, however, the increase was only 5.4 per cent.
“Finland’s population growth, in terms of percentages, has been weaker than in other Nordic countries, and the regional variation has been greater. In Finland, large cities dominate the growth,” Julia Ruotsi, the chief economist at the Finnish Association of Building Owners and Construction Clients (Rakli), said at the time.
Aleksi Teivainen – HT
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Source: www.helsinkitimes.fi
