Housing sales “There is demand there” – Housing prices exploded in several areas of Helsinki in just one year

Coronavirus has paralyzed many functions of society, but the housing trade has nevertheless been hot, even exceptionally brisk last year.

“Last year was an all-time record year for real estate brokers,” says CEO Jukka Rantanen From Sp-Kod, part of the Savings Bank Group.

More than 10,000 more housing transactions were made than in 2020.

According to a recent housing market review published by OP, Finland’s largest financial group, housing prices rose by an average of 3.7 per cent from the previous year in the whole country last year.

The rise in house prices was the fastest in ten years. The best places went to big cities. In the Helsinki metropolitan area, for example, growth was about 5.5 percent.

In Helsinki The prices of old multi-storey and terraced houses rose the most in Kaartinkaupungi and Itä-Pakila, where the rise was on average more than 18 per cent, according to Statistics Finland’s statistics.

Vartioharju, Kalasatama, Kaitalahti, Kuusisaari-Lehtisaari, Roihuvuori, Etelä-Laajasalo and Itäkeskus-Marjaniemi are also among the top price winners. In them, the average price increase exceeded 13 percent.

In Kaartinkaupunki, in the center of Helsinki, the change in average prices per square meter was a staggering EUR 1,459, and in the developing Kalasatama it was almost a thousand euros.

The 10 per cent growth limit was broken in Jolla, Munkkivuori-Niemenmäki, Puotila and Koskela.

Sp-Kodin Jukka Rantanen estimates that the success of Kaartinkaupungi and Kalasatama is due to low supply and high demand, which has been reflected in prices. Both have relatively few old homes for sale.

“Kaartinkaupunki is the very center, and there is always a demand for it.”

On the other hand, the skyscrapers under construction in the fishing port, versatile services and well-functioning public transport connections attract people and pull up the price level in the area, Rantanen says.

“Someone has said that Kalasatama will be the new center of Helsinki.”

Itä-Pakila, on the other hand, offers affordable housing in a detached house area. There, the average price per square meter is less than 4,000 euros, while in Kaartinkaupungi, for example, it is approaching 10,000 euros and in Kalasatama it is more than 8,000 euros.

But what explains the rise in prices in the lesser-featured Kaitalahti in Laajasalo?

Rantanen finds an explanation for the new maritime Kruunuvuorenranta to be built in the area.

“Someone may be interested in new properties in Kruunuvuorenranta but feel that the price of new production is above their own budget. Then the consumer can easily look around: what kind of old housing there is. ”

Negative The development of house prices was in Pikku Huopalahti, Helsinki, Metsälä and Etelä-Oulunkylä, Tuomarinkylä-Torpparinmäki and Malmi.

In Pikku Huopalahti, known for its colorful and diverse houses, the average price per square meter decreased by 221 euros. The residential area was built mainly in the 1990s, ie its building stock is approaching the time of major renovations.

“Many of the apartments that have been available there have certainly already been in such a condition that they need to be renovated.”

The rise in prices was small, ie less than one per cent in Pihlajamäki, Pohjois-Vuosaari and Pohjois-Meilahti, among others.

Data are subject to change, as the figures for 2021 are preliminary. In addition, individual home sales in different postal code areas may change the situation and affect statistics because the areas are small on a city-wide scale.

In the process as house prices rise in many places, the market has been predicting a rise in interest rates, which have remained exceptionally low for a long time. It would increase the monthly housing costs of mortgage debtors.

The European Central Bank (ECB) is expected to raise interest rates for the first time this year. Do you dare to make a home sale in an uncertain situation?

According to Rantanen, it is daring because inflation will eat up the loan as the value of money weakens and a sudden drop in interest rates should not be in sight.

It is important to prepare for the future. When applying for a mortgage, banks take a stress test on consumers, which measures the customer’s ability to pay at an interest rate of 6 percent. However, such high interest rates are still a long way off.

“It is unlikely that the ECB’s key interest rate will rise by more than one percentage point by 2025, unless something special happens now,” says Rantanen.

One way to prepare for an increase in interest expenses is to increase savings. Banks also sell interest rate hedging. However, interest rate caps are quite expensive and there is a risk that the debtor may not benefit from them. Even location still matters.

“Housing prices are forecast to continue to rise in the Helsinki metropolitan area, especially in Helsinki.”

Major however, the rise now seems to be over. The OP Bank Group’s economists estimate that prices will rise by another 2.5 per cent this year from last year, but by 1.5 per cent next year.

According to Sp-Kod’s forecast, house prices in the Helsinki metropolitan area will rise by 4.5 per cent this year.

OP has not published a regional forecast. Economist Joona Widgrén says in general that the rise in house prices in the metropolitan area is still expected to be stronger than in the country as a whole.

“I would expect the rise to be a little more moderate this year than last year. In recent years, the rise in prices in the Helsinki metropolitan area has been almost double the increase in the whole country. ”