Slight downward trend observed in Finnish housing market

print this

The selling times of Finnish homes have lengthened somewhat, and following recent increases in interest rates the growth in new housing loans being taken out has slowed down.
      According to Finnish banks, real estate agents, and construction companies, a distinct turn has been evident in the housing market. As the backlog of unsold apartments is starting to make its presence felt, developers and construction firms are cooling on the start-ups of new projects, and residential construction is also cooling down. At present, the overheating of the market applies largely to rented homes in the growth centres.
     
Despite the perceived slowdown, the demand for homes continues to be strong, as migration is going on at the same time. Moreover, the experts do not believe that prices will actually decline in what is currently seen as a controlled deceleration process rather than a sudden juddering halt.
      "There is a good chance in Finland that the housing market will cool down at a controlled pace",says CEO Matti Inha in the housing market analysis of the Mortgage Association of Finland, published on Tuesday.
     
The same message was conveyed in Nordea’s report on Finland's economic outlook published on Tuesday. According to the bank's report, the upswing of housing prices has clearly slowed down, while at the same time the interest rates for new home loans is showing an upward trend. However, the overall upswing in the interest rates of the housing loans is evening off.
      The experts at Nordea do not believe any distinct fall in property prices is in prospect. Typically, such phenomena happen only in connection with depression periods, for example in the 1930s and 1990s. According to economist Reijo Heiskanen from Nordea, such a decline would happen only during a new recession and in connection with a steep increase in interest rates.
      At the moment, no signs exist of either of these phenomena, and the general feeling is that Finland is not facing the same crunch as the United States.
      Things are further cushioned here by the fact that the housing market has a lesser bearing on the overall health of the economy than in many other countries, including the U.S.


Links:
  Nordea Economic Outlook

Helsingin Sanomat