SKVL housing market forecast: Supply has increased significantly in the housing market – now is the right time to buy

Consumers' purchase intentions have risen clearly – sellers are also motivated

Statistics Finland' s consumer confidence and intention to buy a dwelling within 12 months, published last week, have risen clearly already in May and June. "This is a clear sign that things are now starting to happen in housing sales. However, you should not believe in any tsunami, but in the fact that trade will start to be more stable, and prices will no longer fall," SKVL's Mannerberg continues.

SKVL's sellers' willingness to sell indicator has risen strongly and the buyers' willingness to buy indicator has remained at a good level but did not increase clearly from the previous quarter. This situation has led to a marked increase in supply. "Buyers have a lot of choice, which in part makes trading somewhat slower and options are weighed for a long time," comments Mannerberg. It has been a quiet spring in some parts of Finland, but most brokers report some improvement in demand. With supply currently exceeding demand, no major upward or downward movements in prices are to be expected.

The impact of the interest rate cut has so far been mild

The much-anticipated ECB 0.25 % downward interest rate decision on June 6 had a very mild impact on buyer behavior. About 73 % of brokers did not notice any change or even saw a slight decrease in buyer movement. However, around 27 % of brokers noticed some increased interest. The Euribor 12-month interest rate has hardly moved since the interest rate decision, but the 3-month rate has quickly fallen to the same level as the 12-month rate.

Increased number of investors

The number of investor buyers has also risen to about 16 % of buyers. About a third of investor buyers are institutional investors. 

Currently, about 12 % of home buyers are buying their first home. About 37 % of those buying for themselves are one-person households and families account for about 63 % of buyers.

The biggest area of interest in the market is still newer detached houses and terraced houses in good condition

Detached houses built in the 2000s during the summer season and older houses that have been renovated are most in demand. In terraced houses, newer ones are also the most interesting, and the long-standing trend of having one's own yard is still popular. The purchase of a house in need of renovation is hindered, especially in smaller towns, by the low collateral value in the bank's loan decisions. The strict stance of some banks on older properties suitable as collateral clearly slows down housing sales in smaller localities, even though market prices are low.

Rental apartments

There are no major changes in the rental housing market, but in some cities, students are already looking for good alternatives due to the declining supply. Once student places have been cleared, the demand for small rental apartments is at its best, and demand is strong in university towns. The large supply in most places keeps the rent level unchanged in both small and large apartments. Larger rental apartments are more sought after and their supply is less.

Holiday homes

Holiday home sales are now moderate but have returned to pre-corona volumes. Traditional cottage areas are the strongest, and now the ratio of price and quality level is clearly more attractive than in the past four years. The supply and demand for cottages has also remained at a good level in northern resorts, where even exceptionally valuable holiday homes have been sold. Frequent heatwaves in southern Europe increase interest in buying a holiday home in Finland among foreign buyers.

Forest

The demand for forests is high. The price of forest has levelled off, which has increased the interest of private buyers. In addition, the price of wood has remained high. Many investors also seek to diversify their investments and buy forests.