Haahtela’s October 24 report summarizes the essentials regarding costs. Tarjoushintaindeksi: Rakentaminen on nyt poikkeuksellisen halpaa - Haahtela
By the end of February, Haahtela will likely update the tender price index, so we’ll be waiting for that 
Common sense would say that when labor is available and twiddling its thumbs, contracts would go cheap.
How come the construction cost index doesn’t support the bid index at all? It seems the only reason left is existing companies cutting their margins.
Here’s a little free sample of an alternative reality regarding housing valuation in rural areas. For a few tens of thousands, one could get a perfectly usable detached house as a summer cottage, prices having dropped by 80% in 15 years.
Good discussion about the Finnish housing market
And the comical nature of news reporting / headlines just continues. Really “dares” to say it. :D:
Of course, even a broken clock is sometimes right.
Why wouldn’t it accelerate with falling interest rates, rising wages, and inevitably aided by pent-up demand?
Furthermore, people are still moving to growth centers, where rural housing cannot be relocated.
It’s hard to say how far-reaching conclusions should be drawn from these views when considering the housing market more broadly: “OP Uusimaa stated in a press conference that the number of housing transactions has increased particularly in Espoo’s Westend, Tapiola, and Haukilahti, as well as in Helsinki’s Punavuori, Eira, and Etu-Töölö.”
It’s interesting that when interest rates rose and purchasing power decreased, housing prices barely dipped. Then, as interest rates fall and purchasing power recovers, it’s expected to immediately show as a price increase.
Still, the reference rate hovers around 2.4%. That’s clearly less than the peak, but it’s something entirely different from the zero interest rates during which the price bubble was created.
It’s worth thinking of those as advertisements. Banks sell loans, that’s their business. Every now and then they sell more of it than the customer can pay back, and then there’s a crash. Salaries, by the way, have been falling for several years in a row, and unemployment has increased. How would housing prices rise immediately now?
And wasn’t it precisely this OP that just closed down real estate fund redemptions?
You can see the real situation from Statistics Finland’s statistics.
Regarding those salaries, the situation is indeed quite tricky, as purchasing power hasn’t been great, nor has the “solvency” of companies in many sectors. We are now on the edge of our seats today, wondering if the unions will reach an agreement. If high percentages are agreed upon, it’s good for wage earners, of course, but especially if the stagnation in the construction sector continues, there could be more layoffs, etc., as a counterbalance. So, I don’t know how widely that would increase people’s willingness to take out loans. For some, it probably would, but for others, there’s still concern about tomorrow.
If you read the article, it states that sales are growing more than prices.
A 3% change in prices would be so small that it would only show up in statistics, because individual sellers and buyers do not know the true level of selling prices for a specific item as of 1.1.2025.
When statistics show an increase, it influences the general perception of the price trend.
So who would move there and pay increased housing prices when even at current price levels, sales are not happening? In the long run, movers are mainly foreigners who do low-wage work, as the birth rate in Finland is historically low and there aren’t enough Finnish movers to sustain the market.
Many Finns living or having lived abroad see how the country’s situation has drifted into an unfortunate state. The equation combining one of the world’s highest taxations, a bleak climate, and Europe’s most overweight and apathetic population is not particularly attractive. Economic growth has not been seen for 17 years, and all signs indicate that the situation will not improve and may even worsen. It’s no wonder then that successful Finns are moving at an increasingly faster pace to places like Spain, where the tax rate is lighter, the weather is better, and people are simply happier.
One silently overlooked but significant obstacle to the rise in housing and stock prices is the military threat posed by Russia. When assessing the risks of the next ten years, it is clear that a potential Russian attack must be taken seriously. Whether the probability is 15% or 30%, it is not insignificant if the value of an asset could then plummet to zero. This is a factor that people don’t want to talk about too much, but which inevitably affects both investment decisions and the future of the housing market.
Yes, yes, “sales volumes grew particularly in Hyvinkää, Tuusula, Kirkkonummi, and Vihti”. When the comparison figures are small, you get impressive percentage growth. Are those villages now the growth centers you mentioned, where trade thrives as the population grows? One can, of course, define growth centers by categorically including all surrounding municipalities, but in my opinion, that doesn’t give a very truthful picture of the housing market.
The housing market can indeed be revived with a very simple method: update the asking prices of those listings that have been hanging on Etuovi for months and sometimes years, to be close to today’s market prices, and abandon the mindset of “I won’t sell for less than what my neighbor got for their place in 2021”.
Why would Russia attack a NATO country within the next 10 years when it hasn’t dared to do so since the organization’s founding, and now NATO’s eastern border is very well defended; Finland, Estonia, and (Poland).
The risk is mostly theoretical, especially now that things are being seriously put in order.
The leader of the largest NATO country is a peculiar blond-haired individual, and with him, it’s not even guaranteed that he wouldn’t be the one to attack a NATO country (though hardly any of the countries you listed). Even more likely, however, the same uncle will paralyze NATO and rave about withdrawing his own country from it, after which it’s pointless to talk about NATO as the military deterrent we’ve imagined it to be.
It’s worth reading more history and abandoning the naivety that NATO would be some sure guarantee against a serious threat of war, even nuclear war, with Russia/the Soviet Union.
I don’t know how much Russia’s situation affects, for example, apartment prices in Helsinki, but it certainly influences considerations for investment decisions in this country. Especially in the real estate sector.
The valuation situation has indeed recovered significantly after interest rates have fallen, but even then, mainly short-term rates are low, and long-term rates, in turn, predict them rising above 3% in the long run.
Now, profitable targets can indeed be found by searching, but it seems that with most apartments located in larger cities, the situation still is that the tenant wins and the landlord practically pays for being able to rent it out.
Of course, marketing calculations have been made by banks suggesting that owner-occupied housing is always profitable, but they have a vested interest. The calculations always omit the fact that apartments and their appliances wear out, from which at least an amount equal to the maintenance fee should be accounted for as depreciation. Furthermore, the opportunity cost for tied-up capital has not been considered. Instead of an apartment, one could invest in government bonds with over 3% return, or in affordable HEX shares.
I wouldn’t assess the probability of a Russian attack quite that high either, but I also wouldn’t assess the probability as very high that Finland would achieve much real economic growth during the next 10 years.
So, in other respects, I agree, and we are also building our portfolio based on a very similar view.
If the wage increases materialize as they have been in the headlines, they will mostly go directly into the prices of services and goods. If productivity does not grow, how are wage increases financed other than by raising prices? Especially in services. I wouldn’t hold my breath waiting for housing prices to rise, not even in growth centers.
There are differences between properties and cities, of course, but in the properties I follow, the effect of the interest rate rally has at best melted away from the prices. And some are still trying to sell properties at those peak prices. But even if that interest rate rally is melted away from the prices, the 2019 price level remains.
I leave nuclear war outside of risk assessments, as it makes many current risks very insignificant. Instead, the possibility of Russia testing the functionality of NATO’s Article 5, for example, by targeting a “special operation” at a NATO country, is a possibility that every investor should keep in mind. Conquering some corner, say in Lapland, could already bring a strange liveliness to the Helsinki stock exchange.
So there can’t be any middle ground, of course, other than going all-in on real estate or trembling on a pile of cash in fear? You asked for reasons why prices wouldn’t rise, you were offered perhaps some justifications why larger foreign investors avoid investing here, at least at the current price level. And why many of the wealthier Finns have moved to Southern Europe in recent years. Finland’s education system, with its negative side effects, is also much worse than it was in many people’s childhoods. This is one reason why those who have the opportunity leave for a better life elsewhere.
From a diversification perspective, it’s already a disaster for many different reasons if one has an apartment or apartments in Finland and most stock investments are also in Finland. The risk is small but still present and certainly greater than many think.
Just to clarify, OP was surely talking about households, and I too am talking about purchasing behavior for personal use.
I don’t know anything about the mindset of foreigners.