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Nordea’s housing market review, autumn 2024: Slow recovery in the housing market

The housing market is starting to pick up in the wake of falling interest rates, says Nordea’s most recent housing market review, published in October. The review also expects home prices to rise moderately by the end of the year.

The rise is, however, still curbed by high living costs and an abundant supply of homes. The oversupply is also reflected on construction starts, which are limited.

“Finns’ living costs have risen clearly faster than their earnings, and living is now 25% more expensive than in 2020. This is mainly due to higher interest rates and energy prices. However, this trend has abated this year with interest rates falling and energy prices levelling off,” says Nordea’s Economist Juho Kostiainen, who has prepared the review.

The number of home transactions is still considerably lower than the long-term average, and selling times have still continued to grow longer this year.

“Even though the housing market is still relatively slow, falling interest rates and improved purchasing power will help stabilise it. We expect the short-term reference rates to be about 2% next summer,” Juho Kostiainen says.

Read the entire housing market review for autumn 2024 (in Finnish)

What is Nordea’s forecast for the trend in home prices?

During the next two years, home prices are expected to resume the trend seen in the 2010s: a slightly upward curve in growth centres and a slightly downward curve in the rest of Finland.

“Based on our forecast, prices will rise about 2.5% in Finland next year, driven by falling interest rates. In 2026, we expect the changes in prices to be mixed. In growth centres, we expect prices to rise 4% in 2026, as the oversupply in the housing market is starting to melt away,” says Juho Kostiainen.

Elsewhere in Finland, the rise in home prices is expected to halt after next year. Across the country, home prices are expected to rise 2.2% in 2026.

“However, our home price forecast involves a high degree of uncertainty, which makes other, very different scenarios possible, too,” says Juho Kostiainen.

Housing market in big cities: Smallest price drop in Turku

For the past two years, home prices have fallen broadly across Finland although this year they have levelled off. 

“When we look at the big cities, prices have resisted the downward trend the best in Turku. The biggest drop in prices has occurred in Vantaa and the second biggest in Helsinki,” says Juho Kostiainen. 

Our housing market review assumes that the demand for homes will start to grow in the so-called growth triangle (Greater Helsinki area, Tampere and Turku) along with the accelerating population growth. This will also reduce the oversupply. 

According to Juho Kostiainen, the oversupply is the biggest in the Greater Helsinki area, but it’s expected to melt away significantly over the next two years. The number of home transactions has increased the most in Espoo year-on-year.

“There are less homes listed in Tampere than in the Greater Helsinki area, and we expect that supply and demand will be balanced in a year or so,” says Juho Kostiainen.

Housing market in the rest of Finland

Across the country, home prices were slightly up year-to-date in July, but still 2.6% lower year-on-year.

“The only places in Finland where prices have increased year-on-year are Kotka, Rovaniemi and Vaasa,” says Juho Kostiainen.

Moreover, the drop in prices has been smaller in Lahti, Rauma, Kuopio, Lappeenranta and a few other places than in the growth triangle.

The places that have seen prices fall the most are Mikkeli and Pori.

Juho Kostiainen points out that if you look at the 10-year trend in home prices, Oulu is the only place outside the growth triangle where prices have remained relatively stable. In other provincial centres, prices have trended down in the long term.

How does the market look for first-time home buyers?

First-time home buyers are still in a good position in the housing market because they can get their first home for less money than for years. 

Even though home prices are expected to rise towards the end of the year, the rise should be moderate. This means that there are still good opportunities find a home at a lower price than before.

Read more about buying your first home

What can you expect if you are changing homes?

People often switch homes because they need something different from their home. 

If you want to move to a bigger home, falling prices may be good news for you. Now that property prices have fallen, the prices of larger homes have mainly dropped more than the prices of smaller homes. This means that if you buy a bigger home, you will need less money than before to cover the price difference.

If you’re considering changing homes, note that selling times have become longer as the demand for homes has decreased. 

Read our tips for changing homes

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