Housing market

The transaction volume for previously owned homes grew by 13% last year but remains somewhat lower than normal.

“The housing market has continued to be subdued,” says Nordea’s Economist Juho Kostiainen, the author of the review.

Despite the increase in the number of housing transactions, selling times have remained at more than four months on average and prices have mostly fallen.

“The housing market is still weighed down by Finland’s weak economy, which has raised the unemployment rate to the highest in the EU and lowered consumer confidence,” Kostiainen says.

Read the entire spring housing market review (in Finnish)

Falling home prices have created a contradictory situation for those looking to sell their home and buy a new one. Price declines can cause current homeowners to become “locked in” to their homes, delaying a move.

Although the price drop affects both the home being sold and the one being bought, many owners try to avoid losses by postponing transactions.

“In principle, the loss on the sale of a home caused by a general price decline shouldn’t have a financial impact for someone changing homes if they buy their new home,” Kostiainen says.

This is because falling market prices reduce the value of both the old and new home, which could reduce the price difference that you would have to pay for the new home, and this could actually make the transaction financially worthwhile.

Read our tips for changing homes

“In the largest cities, prices have continued to decline,” Kostiainen says.

Over the past three and a half years, prices have fallen the most in Vantaa and Helsinki.

“Prices have been the most stable in Oulu, which once again saw the smallest price decline among the major cities last year.”

Across the country, the prices of previously owned apartments fell by 2.8% in January compared to a year earlier, and by an average of 2.5% throughout last year.

In many regions with declining populations, the drop in home prices has continued for 15 years, with no signs of reversal. 

“Outside the growing urban centres, the oversupply of housing is structural, caused by shrinking populations. In these areas, no recovery in home prices is expected; instead, prices are expected to continue to decrease in the coming years.”

Last year, the prices of previously owned apartments rose the most in Kokkola, Kajaani and Kerava. Prices also increased in Rovaniemi and Riihimäki. In these cities, the rise in prices was driven by normal market dynamics.

“Very little new housing has been built in these cities, while business activity has been strong, attracting new residents and increasing demand. This shows that the housing market is operating normally, with prices determined by supply and demand,” Kostiainen notes.