Cranes and high-rise buildings in Vuosaari, Helsinki, on 11 January 2024. Permit applications for new residential construction projects indicate that the mean size of newly built units will increase in the coming years, according to OP Financial Group. (Jussi Nukari – Lehtikuva)
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THE FINNISH real estate market has taken a turn for the better after a languid first half of the year, views OP Financial Group.
OP on Tuesday revealed that it has revised up its forecast for house price growth in 2025 from 2.0 to 2.8 per cent but also scaled back its expectations for this year, estimating that the prices would fall by 2.0 per cent, rather than the previously forecast 1.5 per cent, in 2024.
“The recovery of house markets has started more lethargically than expected and, in part, our more positive view of next year is about the recovery being slightly delayed. In the big picture, our expectations have not changed,” Joona Widgrén, a senior economist at OP, said in a press release on Tuesday.
“House sales volumes have already risen from their low point, but the sales remain clearly quieter than usual. Our expectations have not changed significantly in regards to the rest of the year, and we continue to expect that the house market will recover during the autumn and winter,” he added.
Widgrén stated that falling interest rates on housing loans, solid wage development and improving economic situation should provide conditions for a more sustained recovery of the house market. On Monday, the 12-month Euribor, the most common reference rate for housing loans in Finland, fell below three per cent for the first time since mid-December 2022.
“The deterioration of the labour markets is dampening the mood a bit, but overall the outlook for the house market picking up is good,” he said.
In Finland, investments in residential construction have decreased by as much as 35.7 per cent since early 2022, to a level not seen for 15 years. Widgrén stated that the dramatic slowdown in construction alone explains why the national economy has failed to keep pace with the eurozone economy for the past 30 months.
“The crash in construction has played a leading role in the economic infirmity,” he said.
There are signs of a turn for better also in that regard, according to OP. Applications for building permits, when adjusted for seasonal fluctuations, have rebounded from the historic lows witnessed at the beginning of the year and the number of job openings in construction has crept up from earlier levels.
Housing production will nonetheless remain exceptionally low in both 2024 and 2025.
Widgrén said the permit applications indicate that the mean size of residential units is set to increase. “Especially the mean size of new flats will increase in coming years and small flats will likely make up a smaller share of new residential units,” he said.
Aleksi Teivainen – HT
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Source: www.helsinkitimes.fi
