Minister of Housing warns of possible overheating in housing market

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Minister of Housing Jan Vapaavuori (Nat. Coalition Party) sees signs of possible overheating in the housing market.
      “I wouldn’t call this a bubble yet, but there are slight signs of concern in the air. In some growth centres, the situation is worrisome”, Vapaavuori said in Helsinki on Monday.
      “The situation differs from what it was in the autumn a year ago”, Vapaavuori said.
     
Prices of dwellings rose sharply in late 2009. In the Helsinki region, especially in Helsinki itself, prices exceeded the previous records, set in the spring of 2008.
      At the turn of the year, it has been common for apartments to sell for above the asking price, although Statistics Finland reports slight indications of calming on the market.
     
There are a number of reasons behind the heating up of the housing market. One of them is the current low level of interest rates, which have served as an incentive to take loans to buy a home in a situation in which rents have been rising.
      Statistics Finland reported on Monday that rents rose last year by about four per cent in all of Finland. In the Helsinki region the rise in the prices of freely financed housing in the Helsinki region has been more than four per cent. At the same time, prices of other goods and services have been on the decline.
      The number of homes on sale has declined significantly during the past year. Construction companies almost stopped building new housing when the recession hit in the autumn of 2008. Although demand has increased again, construction companies are cautiously on the move. The number of housing starts has remained significantly lower than it was a couple of years ago.
     
Vapaavuori warns that the housing market may fluctuate rapidly in either direction in the near future.
      “The world is changing at such a dizzying pace all the time. Affecting the housing market are at least interest rates, unemployment, and confidence, which can change rapidly”, Vapaavuori said.


Previously in HS International Edition:
  Housing prices rising in spite of recession (1.2.2010)

Helsingin Sanomat