According to PTT’s forecast, prices will return to the upward trend in spring and summer, when the uncertainty dissipates. For rent, PTT predicts an increase of more than 2 percent.
Housing market the turmoil will continue this year and a further fall in prices is expected, estimates Pellervo Taloustutkimus (PTT) in its housing market forecast. According to the forecast, the price of old apartment buildings will fall by 2.5 percent nationwide.
The drop in prices is accelerated by economic uncertainty and rising interest rates. Towards the end of the year, however, the trend starts to change.
“The decline takes place at the beginning of the year, and at the end of the year, prices start to rise again, when the housing market recovers from the shock caused by the energy crisis and rising interest rates,” says the PTT economist Veera Holappa in the bulletin.
Consumers’ confidence and willingness to go shopping has been exceptionally weak recently, but PTT predicts that a turnaround is coming. The pent-up needs to change apartments start to dissolve when positive signs start to appear in the economy. However, stabilizing the situation requires that electricity prices begin to stabilize and households get used to the new, higher interest rate.
For rent according to PTT, an increase of around 2.3 percent is expected this year. Ara apartments are under pressure for four percent increases as a result of increased costs.
“Last year, many landlords did not increase the rent due to the tight market situation. Despite this, the increases are still below the increase in costs, because a lot of new apartments are still being built in the beginning of the year, so there is enough supply,” says Holappa.
In PTT’s forecast, there are no signs of such an imbalance in the housing market that could lead to a downward spiral, a wave of forced sales and that would pose a risk to the Finnish economy.
“There is no collapse in sight in the housing market, and they are not a source of instability for the entire economy. Although prices are falling, this development does not predict a negative cycle for the housing market, which would lower prices further”, says PTT’s CEO Markus Lahtinen in the bulletin.
Stability for example, the fact that housing prices in Finland have not risen faster than household incomes speaks for it. In addition, Finns’ effort to pay off their mortgage reduces risks.
“In any case, the most important protection against instability is to repay mortgages evenly right from the beginning of the loan term, which is fortunately customary in Finland. The legal package to curb household indebtedness was also approved at the beginning of the year, and the length of mortgage loans was limited to a maximum of 30 years. However, the upper limit should have been 25 years earlier”, says Lahtinen.
In its housing market overview published earlier this week, OP estimates that prices will fall by an average of 4–6 percent this year.
The heaviest downward pressure is on the capital region, where OP now expects a 6–8 percent decrease.
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