According to a housing market review conducted by Hypo, a credit institution specializing in the sector, Finland is expected to see the biggest drop in housing prices this year since 1993. Several factors, including high interest rates, an increase in the supply of new apartments, and a decrease in demand due to economic uncertainty, have contributed to this downward trend. The report highlights that a similar situation was last observed three decades ago, indicating the severity of the current market conditions.
Factors Influencing the Housing Market
Hypo's statement points to high inflation and prolonged interest rate pressure as significant factors impacting this year's housing price development, surpassing earlier estimations made at the beginning of the year. The combination of these factors has led to a decline in housing prices. In 2023, the number of property transactions is predicted to decrease by one-third compared to 2022 and by one-fifth compared to the pre-Covid year of 2019.
Projected Price Decrease and Future Outlook
The report expects housing prices to decline by an average of seven percent across the country in 2023, with the Greater Helsinki area experiencing an eight percent decrease. However, there is a positive outlook for the future. Hypo predicts that housing prices will start to rise moderately towards the end of the year, contingent upon changes in demand. It anticipates that next year, with fewer new apartments being constructed, stabilized interest rates, and a predicted growth in demand, the situation will improve.
The housing market review conducted by Hypo suggests that Finland is facing the most substantial decrease in housing prices since 1993. Factors such as high interest rates, an influx of new apartments, and decreased demand due to economic uncertainty have contributed to this trend. However, the report also provides hope, stating that housing prices are expected to gradually rise towards the end of the year, with a more positive outlook for the future. These predictions depend on changes in demand and other market dynamics.