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Nordea: Housing market to recover in coming months

"We will have to wait until next year for a significant increase in prices," Nordea economist Juho Kostiainen said.

So-called tilt-shift photo of apartment buildings in Helsinki's Töölö district.
So-called tilt-shift photo of apartment buildings in Helsinki's Töölö district. Image: Petteri Bülow / Yle
Yle News,
STT

The ongoing decline in Finland's housing prices will end in coming months and the housing market will improve, according to Nordea's latest housing market report.

The bank said that housing sales will gain momentum again, after household purchasing power improves towards the end of the year.

Those improvements will be prompted, according to Nordea, by salary increases that go into effect over the summer, the levelling off of interest rate hikes and a slowing of inflation rates.

The prices of old apartments dropped by 6.2 percent nationwide and by 6.7 percent in Finland's six biggest cities in April, compared to the same month in 2022.

Last week, a housing market review published by the Mortgage Society of Finland Hypo suggested that this year, the country will see the biggest drop in property prices since 1993.

On Wednesday the Bank of Finland reported that "the stock of households’ housing loans exceptionally contracted by 0.3 percent, year-on-year, having grown at an annual rate of 3.7 percent a year ago."

In its report, Nordea also noted that there was room for improvement concerning people's financial skills, as it pointed out that rising costs due to growing interest on housing association loans have taken many people by surprise, as they did not necessarily take them into consideration.

Nordea said apartment sales continued to be sluggish in the beginning of the year, with sales volumes around 30 percent below long-term averages in April.

Nordea economist Juho Kostiainen said there have been signs that the decline in housing prices has stopped in recent months.

"In our estimation, prices are starting to bottom out. We expect prices to drop by seven percent across the country and 10 percent in the capital region from last year's peak levels. This year, there is still plenty of [work on new] apartments to be completed, which will keep the price trend subdued in the rest of the year as well. We will have to wait until next year for a significant increase in prices," Kostiainen said.

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