Clear downward trend in prices of one-bedroom Helsinki flats as well as large residences

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Prices of residences turned sharply downwards in September, reveals a price report by the Central Federation of Finnish Real Estate Agencies (KVKL).
      “September was the turning point. The prices came down quite substantially, by five to ten per cent”, explains managing director Risto Kyhälä of the Huoneistokeskus real estate agency.
      In Helsinki, the prices of one-bedroom flats have fallen from last spring’s top figure by 11.5 per cent. This translates to a decrease in value of an average one-bedroom flat, say, in the district of Kallio, by about EUR 15,000 to 20,000.
      The price per square metre of an average Helsinki apartment of living room, bedroom, kitchen & bathroom is now EUR 3,803, which again signals an average depreciation by 400 euros from the spring.
      Across Finland as a whole the average reduction of the cost of a one-bedroom flat was in the region of eight per cent.
     
Compared to the one-bedroom flats, the prices of large family residences have fallen even more dramatically in Helsinki. Since the spring, no less than 18 per cent has been sliced off their value.
      In fact, there have been very few transactions, so the average price can vary a great deal. Between March and September, the top price per square metre of a four-bedroom residence fell on average by nearly EUR 900.
      “In the capital area the decline in price has been fastest in Helsinki, where the prices of dwellings rose in the 2000s correspondingly faster than anywhere else”, says Jukka Malila, Managing Director and CEO of KVKL.
      The price development in the neighbouring city of Espoo, on the other hand, has been quite the opposite. There the prices of one-bedroom apartments rose by four per cent between April and September.
      Even in Vantaa, the going rate for a one-bedroom flat has come down only marginally.
     
For dwellings of various sizes there are more and more clearly separate markets. Where the prices of one-bedroom flats have fallen, the price development of studio apartments has been remarkably steady.
      In fact, in Helsinki’s Kallio district, even more studio flats changed hands in September this year than in 2007. “Investors have returned to the market because the rental prices have gone up”, comments Kyhälä.
     
But even though it seems the investors have returned, as a whole the brakes were still applied to the housing market in August-September.
      According to CEO Tommi Rytkönen of the Kiinteistömaailma real estate agency, a quarter fewer contracts were exchanged in August and a fifth fewer in September than in the same months in 2007.
      Judging by the beginning of October trading figures, the real estate business looks set to continue sluggishly, KVKL estimates.
     
According to Risto Kyhälä the end-of-year interest rate development will largely dictate the direction of the housing market development.
      People’s faith in the permanence of their employment also has an effect on their house-buying decisions.
      Luckily very few people have so far ended up in the two-home trap. Nobody has been coerced to sell their home at knock-down rates as yet.


Previously in HS International Edition:
  Number of new housing loans turned clearly downwards in August (1.10.2008)
  Upward trend in Helsinki housing prices is stalling (7.2.2008)

Links:
  Central Federation of Finnish Real Estate Agencies (KVKL)

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