Upward trend in Helsinki housing prices is stalling

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Recent statistics indicate that the long upward trend in housing prices in Helsinki appears to be stalling.
      According to the City of Helsinki Urban Facts, the average increase in housing prices remained at 7.3 per cent in 2007, while in 2006 the price growth was still more than 10 per cent.
     
In the last quarter of 2007, the price development in Helsinki was sluggish.
      In comparison with the third quarter, the prices rose just by 0.9 per cent. The average of the entire city’s prices per square metre grew by around EUR 40, reaching EUR 3,300.
      In the eastern districts of Helsinki, the price trend was actually slightly negative.
      According to preliminary estimates, the median price for old apartments remained a couple of per cent lower at the end of the year than it had been in the period from July through September.
      The most significant proof for the slowing down of housing prices can be found in the district of Kallio. According to the preliminary housing price statistics of Statistics Finland, only minor changes were seen for example in the prices of studio apartments in the area through the quarters of 2007.
      However, Ilkka Lehtinen from Statistics Finland points out that the figures for the last quarter have not been finalised as yet.
     
Based on the home price development in the districts of Kallio and Etu-Vallila, Matti Kasso, the former deputy CEO of the Finnish real estate agency Igglo, says that "a certain kind of slowdown in the rate of price rises has already happened".
      "When looking at the price trend over the entire year, it seems that home prices have no longer risen significantly", Kasso notes, predicting that no major price increases can be expected in the near future.
     
The changes perceived in the Kallio price level can be regarded as indicators which predict future changes in general, Kasso continues.
      "Kallio is the peak area for apartment turnover, which is why the changes are easier to detect", he adds.
      However, Kasso does not see any similar trend as in the early 1990s, when a significant number of residences were purchased by investors. This time the investors have not steered the market. Currently, interest rates are also noticeably lower than 15 years ago.
      In Espoo and Vantaa, the development of housing prices follows the trends of the capital.


Previously in HS International Edition:
  Housing prices continue to rise, number of sales decline (1.8.2006)
  Helsinki housing prices reach levels equivalent to pre-recession bubble (5.9.2005)

Links:
  City of Helsinki Urban Facts
  Statistics Finland

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