Finnish Housing Market: Developer and Buyer Activity at Historic Lows



Discover the reasons behind the low levels of developer and buyer activity in the Finnish housing market.

The Finnish housing market has been shaped by a high standard of living and a transparent legal framework, leading to gradual and predictable development in recent years. However, measures to control inflation have increased lending costs, impacting demand. The latest analytics provide insights into how these measures have affected construction volumes, transactions, and price levels.


Finnish Housing Market: Developer and Buyer Activity at Historic Lows

From 2015 to November 2023, over 86 thousand permits were issued in Finland for residential building construction, reflecting developer activity and market trends. The construction of new housing saw significant growth from 2015 to 2017, driven by government agreements aimed at improving urban infrastructure and promoting housing development. Local governments also implemented property tax measures to encourage land use.

Innovation in housing design and energy-efficient construction solutions have been on the rise, influenced by rising energy prices. The pandemic and movement restrictions in 2020 and 2021 led to increased demand for suburban real estate, resulting in a surge in permits for private house construction. However, 2022 and 2023 saw a sharp decline in developer activity, leading to bankruptcies among major developers.

Interest rates have been rising since mid-2022, increasing borrowing costs for consumers. This has led to a decrease in the number of transactions, particularly in new buildings. The primary real estate market in Finland has shown sensitivity to financing availability, with high interest rates impacting both buyers and developers. The decline in housing construction activity may have long-term effects on market affordability.

The Helsinki region has historically been the most expensive area for housing in Finland, but a decline in transactions and prices has been observed in recent years. Changing preferences, market saturation, and the popularity of remote work have contributed to increased activity outside major cities. Prices for real estate in the capital have increased by 32% over 8 years, while other regions have shown price fluctuations and growth since 2015.

The Finnish housing market has experienced significant shifts in construction activity, transactions, and prices due to factors such as inflation control measures, rising interest rates, and changing buyer preferences. These trends highlight the importance of monitoring market dynamics and adapting to evolving conditions in the real estate sector.

Finnish Housing Market: Developer and Buyer Activity at Historic Lows

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