According to Hypo’s housing market review, apartment prices in the capital region will develop weaker than the rest of the country this year for the first time in almost 15 years.
Apartments prices will decrease at the end of the year and prices will decrease next year for the first time since 2015.
Suomen Hypoteekkiyhdistys (Hypo), which specializes in housing finance, estimates in its recent housing market review that the rise in interest rates and inflation will cause “headwinds” in the housing market and the support brought by the “remote elite” will fade.
According to Hypo’s forecast, house prices will rise by a total of 1.5 percent this year and fall by 0.5 percent next year.
“Only strong employment supports the housing market when there are enough headwinds with higher interest rates, thinning purchasing power and the removal of exceptional support brought by the corona”, Hypo’s chief economist Juhana Brotherus and economist Juho Keskinen write in the review.
Tariff will rise this year, according to Hypo, only thanks to a strong start to the year, as the end of the year will slide down.
You can’t talk about a collapse, because the housing market is supported and stabilized by the strong employment situation and the thick buffers of households.
However, if employment declines, housing prices will clearly plunge, according to Hypo.
“If the economy turns into a deep recession and the labor market freezes, we will see a cold ride in the housing market,” Brotherus estimates.
In any case, the real prices of apartments will fall clearly when inflation and wages rise faster than apartment prices or rents in the next few years.
Read more: HS’s calculator shows how the housing market is developing in your area
Capital region house prices will develop even more poorly than in the rest of the country this year. According to Hypo, this is happening for the first time since 2008.
The housing index of Hypo’s review predicts a drop of more than one percent in the prices of the capital region during the next six months.
However, a strong first year in the capital region also keeps the price readings positive for the entire current year. Hypo predicts that apartments in the capital region will increase in price by 1.0 percent this year, but next year the increase will fade to 0.5 percent.
The historically high new construction increases the supply in the capital region, and at the same time the rise in interest rates hits valuable areas where the loan amounts are larger. In addition, the drop in the price of studio apartments will drag down the prices in the capital region.
In April–June, there were more than 11 percent fewer apartment deals in the capital region than a year earlier, but prices still reached a good one percent plus. The price drop of studio apartments deepened to almost two percent, and the real prices of small apartments plunged as much as eight percent.
in Tampere and in Turku, the Hypo-index predicts the freezing of the price increase. However, Tampere’s migration gain at the beginning of the year was the largest in 25 years, which brings a “tailwind” to the region.
“Fortunately, the magic of Manse lasts, so Finland is not only dependent on the capital region,” Hypo’s economists write.
According to Hypo, there is currently no downward trend in prices to be seen in Tampere or Turku, because prices in both are cheaper than in the capital region.
In Tampere, too, apartment sales fell by a good nine percent in the spring, while sales in Turku declined by a good five percent.
In Tampere, however, prices still fell by about five percent, while in Turku, after a very strong start to the year, it turned slightly cold.
Read more: The housing market in Finland slowed down, and housing prices are already falling in practice in many big cities as well – should we be worried about the development?
Chief Economist According to Brotherus, “winter comes early to the housing market”, when increased interest rates weigh on mortgage borrowers and inflation eats away at purchasing power.
In addition, the “corona home” that surprisingly raised house prices will slowly become history, Brotherus predicts.
During the corona pandemic, apartment prices rose by eight percent in the capital region and by six percent in the whole country.
The prices of larger apartments rose, especially in growth centers and also in their surroundings, as knowledge worker households looked for additional space.
Brotherus estimates that part of this additional support brought by the “remote elite” to the housing market may gradually dissipate.
“Remote work will certainly remain a part of the everyday life of city-dwelling knowledge workers, but not as dominant as in the two exceptional years.”
Apartments according to Hypo’s forecast, prices will fall this year for the first time since 2001. The reason is the abundant construction of apartments and the increased need for additional square footage.
In addition, the decrease is due to difficulties in the rental market, which are partly not reflected in the official statistics.
Hypon Brotherus notes that especially large landlords have introduced “first month free” campaigns.
In the announcements of professional landlords in the capital region, 10–30 percent already show these attractive offers.
“The discounts actually mean a hidden rent reduction: one free month means a rent reduction of more than eight percent, but the market reality is not reflected in the official rent indices,” Brotherus estimates.
According to the statistics, rents rose in late spring by just under one percent in the entire country and in the capital region by 0.3 percent from the previous year.
#Apartments #Hypo #predicts #drastic #turn #housing #market #Apartment #prices #capital #region #turn #exceptional #decline
