Housing prices will start to rise cautiously next year, OP’s economists predict. At the moment, Lahti has the best home buying ability among the big cities in Finland.
Apartment prices are now falling more than expected, especially in the capital region, according to a recent housing market review by OP Group economists.
OP’s economists now estimate that apartment prices will fall by 6–8 percent in the capital region this year and by 4–6 percent in the rest of Finland. In the whole country, prices are expected to drop by an average of 5–7 percent. At the end of last year, the estimate of the drop in prices in the whole country was 4–6 percent.
In January-February, apartment prices fell by an average of about 5.5 percent year-on-year. Of the big cities, the drop in prices was strongest in Helsinki, where prices fell by an average of almost 7 percent in January-February.
According to the review, apartment prices will rise slightly next year, and transaction volumes will slowly return to the level of typical apartment transaction years, i.e. the level of the years before the corona virus.
Falling prices do not compensate for rising costs and interest
According to the housing affordability index calculated by OP’s economists, the best housing affordability in Finland’s big cities is currently in Lahti, the weakest in Helsinki.
The ability to buy a house is assessed according to whether more than a third of the household’s disposable income goes to loan repayment, interest and repayments combined.
The housing affordability index describes the possibility of a household with a median income to buy a 55-square-meter apartment. In the calculation, it has been assumed that the apartment is bought with 85% debt.
– Even though the falling house prices slightly improve purchasing power, the drop in prices has not been enough to compensate for the weakening of purchasing power caused by the rise in interest rates and costs, says Widgrén.
Yesterday, the Bank of Finland expressed its concern about the consequences of rising interest rates. According to it, households that took on a lot of debt during low interest rates are at risk of getting stuck.