Alright, an update:
The studio apartment has been for sale for a week, and I’ve had a couple of inquiries and subsequent viewings. Both were looking at it as an investment property, and one is considering making an offer. So, it’s relatively quiet, but there’s some activity.
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What kind of impact will the housing benefit cuts have? Students will hardly be able to afford studio apartment rents with the housing supplement anymore. Will the demand for larger apartments/shared flats increase? Will studio apartment prices drop if people can only afford to pay 350-400 euros per month in rent?
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At least in Kuopio and Joensuu, there has been a lot of interest in more affordable studio apartments.
My own most affordable studio in Kuopio, which I rented for 489e/month, received over 20 applicants immediately on Oikotie despite its small size.
Apparently, some kind of Kela limit is 560 e/month; if you can get below that, it’s not questioned and accepted right away. This is not a fact, but something heard from an applicant.
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That’s right. That’s why expenses are covered by working or taking out a student loan.
Living in a shared apartment can indeed save on expenses. It’s a viable option when, for example, friends or relatives move to the same locality to study. However, I dare say that many people have a reasonably high threshold to move into a shared student apartment with strangers, when the flatmates’ life management and habits are a complete mystery. And at the moment of choice, many are willing to pay extra for the privacy of living alone.
Other than students also move to growth centers, and household sizes are decreasing. The demand for one and two-room rental apartments is not going to disappear. If their demand decreases, it will be reflected in the construction solutions for new apartments. And if there is an oversupply - as in recent years - it will curb the rise in rents. But we are far from a scenario where rent levels would significantly decrease.
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Linkataanpas tännekin sama Taloustaidon juttu, jonka @Sauli_Vilen linkkasi jo aiemmin EQ-ketjuun:
Asuntosijoittajan näkökulmasta jutun mielenkiintoisin anti on mielestäni tässä pätkässä:
Asuntosijoittajan (etenkin instituutiosijoittajan) näkökulmasta tuottoarvomenetelmä on mielestäni ainoa oikea tapa arvioida asunnon arvoa, koska rahastojen kohteita ei ole realistista edes olettaa myytävän yksittäisinä asuntoina. Tuottovaatimusten nousun myötä asuntojen arvot ovatkin laskeneet tuottoarvomenetelmää käyttäen kymmeniä prosentteja, joka on saanut nykyisen jumin sijoittajamarkkinoille aikaiseksi.
Nollakorkojen aikaan asuntosijoittajat ostivat hyvin matailla tuotoilla asuntoja omistusasuntoa hankkivien nenän edestä, jolloin kauppahintametelmällä arvioituna osa asunnoista olisi ollut jopa tuottoarvomenetelmää halvempia.
Tällä hetkellä myynnissä olevista asunnoista on hyvin vaikea löytää tuottoarvomenetelmää käyttäen houkuttelevia sijoitusasuntoja, eikä näillä hintaa niitä ostakaa kuin muutaman vuoden takaisia hintoja tuijottavat tuulipuvut. Ruudun takana sijoitusasuntomarkkina on erittäin stressaantunut, josta saadaan paloitellen lisätietoa yksittäisten julkisuuteen tulevien tapausten myötä. EQ:n rahastosijoittajilla onkin tässä pureskelemista mitä tehdä, kun alkuperäisestä sijoituksesta on haihtunut savuna tuuleen 60-65%.
Sijoitusasuntojen hintojen nousun odottelu kestäneekin vähintään yhtä pitkään, kuin rakennusalan elpyminen. Seuraava haaste tuottojen kehitykselle on tuleva opiskelijoiden asumistuen leikkaus.
Let’s also link here the same Taloustaito article that @Sauli_Vilen already linked earlier in the EQ thread:
From a housing investor’s perspective, I think the most interesting part of the article is in this snippet:
From a housing investor’s (especially institutional investor’s) perspective, I believe the yield value method is the only correct way to assess a property’s value, as it’s not even realistic to assume that fund properties would be sold as individual apartments. With the rise in yield requirements, property values have indeed fallen by tens of percent using the yield value method, which has caused the current stagnation in the investor market.
During the zero-interest rate era, housing investors bought properties with very low yields right from under the noses of those acquiring owner-occupied homes, meaning that some properties, when valued by the transaction price method, would have been even cheaper than by the yield value method.
Currently, it’s very difficult to find attractive investment properties for sale using the yield value method, and at these prices, only those fixated on prices from a few years ago are buying them. Behind the scenes, the investment housing market is extremely stressed, and more information is emerging piecemeal with individual cases becoming public. EQ’s fund investors certainly have a lot to chew on regarding what to do when 60-65% of their original investment has vanished into thin air.
Waiting for investment property prices to rise will likely last at least as long as the recovery of the construction sector. The next challenge for yield development is the upcoming cut in student housing benefits.
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In Suomussalmi, the bank is reluctant to grant a loan for a house. Helsingin Sanomat’s headline blames the bank as if granting a housing loan were some automatic obligation:
This is probably again the problem that from the bank’s perspective, the collateral value of a detached house in a remote area is 0. If there were some other collateral, the loan would be arranged. Personal guarantors are not accepted nowadays.
EDIT: That headline “An inherited house in a remote area was sold, but the bank prevented the sale” bothers me. It is generally thought that a sale can only happen when the buyer has financing. And the bank doesn’t prevent the sale, but only the financing.
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The right loan type for this is probably an unsecured consumer loan. However, the margins on those are not quite in the same league as with a housing loan. Also funny is the comparison in the article to car loans. Cars, at least, have a somewhat functional secondary market and a value that is by default above 0, unlike an increasingly large part of Finland’s real estate stock.
In commercial properties, there are probably already actors, as per the article, who handle worthless properties off the market. Will we see something similar in residential properties as well?
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Nothing prevents Aku from financing the deal himself if the buyer doesn’t get a loan from the bank. A small down payment and immediate transfer of ownership to the buyer (so he doesn’t end up owning it again if the rest of the purchase price isn’t paid 
). After that, the expenses from the empty house stop running and the matter is settled.
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An unsecured consumer loan can be obtained for a maximum of 50,000 euros, which is not enough to renovate a dilapidated 30,000 euro house. However, the Helsingin Sanomat article also makes no mention of self-financing. We are on very thin ice if there is no self-financing for such a small loan and one would have to use a state guarantee or Garantia.
It’s easy to blame the bank for not granting a loan when the situation is only superficially described. There can be one reason after another why a loan is not granted, and the potential buyer may not even dare to tell the whole truth. One example is that the bank has looked at the positive credit register and found that the applicant already has too many unsecured loans.
Even when buying a car on an installment plan, a down payment is usually required. And a car is truly liquid compared to a house, and its value development (=decrease) is relatively predictable. If installment payments fall behind, it’s easier to repossess a car for auction than a house in Suomussalmi.
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Quite a perfect storm is certainly brewing here… The combined effect of these might be quite unpleasant. And for a surprisingly long time.
• housing investment funds on the ropes (for a long time)
• students on the housing supplement for student financial aid
• pension companies start cleaning up their balance sheets from real estate (the weight of real estate even halves)
Phew!
”The practical effects can be significant. Pension companies are very significant real estate owners in Finland.
According to the Finnish Pension Alliance TELA (Työeläkevakuuttajat TELA ry), the combined real estate investments of the earnings-related pension scheme amounted to 23 billion euros at the end of last September.
”The lion’s share of our real estate consists of direct real estate ownerships in Finland. It is clear that this specifically affects Finnish real estate.””
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Interesting reflection on the value of housing, although a year old.
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The share of real estate investments in pension assets has been declining for quite some time:
And of course, it must be remembered that real estate investments include more than just residential properties.
To the extent that holdings of residential properties are reduced, I believe it will happen in a controlled manner for pension companies. Instead of major market shocks, the impact will be more visible in the amount of new construction. This will happen both because pension companies will no longer be developers in the same way as before, and because larger investors will have opportunities to buy completed residential buildings instead of developing them.
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You don’t have to, do you? Usually, the interest rate is lowest with the smallest possible €0 down payment. Based on calculators and my own experiences, at least.
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The amount of the down payment in a car purchase depends on the car’s age, the customer, the payment period, and any potential residual value. Financing has been arranged for newer cars with a 72-month payment period, a 0€ down payment, and a 40-45% residual value (this equation doesn’t quite work, the residual value is more than the car’s value if you trade it in when it’s, say, 3 years old). A 10-year-old car is rarely available without a down payment unless the car’s value relative to income is very low…
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Yes, that’s exactly what I also believe, that the allocation to real estate will continue to decrease, but existing real estate ownership will not necessarily change. Pension companies are also slow, so the market might already be in a different position when changes start to happen.
E. The timing for this change is indeed the worst possible. The same could be said about the allocation change of equity assets away from Finland and towards US ETFs..
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It seems there are quite a lot of relatively new, already rented apartments for sale, which wannabe landlord-investors, who most likely became real estate investors during the zero-interest rate era, are trying to get rid of.
Just now, I noticed an apartment for sale in an apartment building built in 2019, where the rent, after maintenance fees, leaves approximately 9000 euros per year. The selling price of the apartment is roughly 40t€ and the debt-free price is 215t€. From this, I calculated a net rental yield of 4.2%. The property’s cash flow for the current owner is 3400 euros per year in the negative after financing costs.
This apartment is, as far as I understand, in a very good location in the center of a provincial capital. I myself might consider investing in something like this with a net rental yield of roughly 6%, which would mean a price tag of about 150t€ for this property. It seems the deal won’t happen, as the seller would still have to give 25t€ along with the deal. 
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The interest rate shock is one reason. But a while ago, another investment style also became quite common: buying new properties with the idea of renting them out during the interest-only period and then selling them for a profit a few years later, after the interest-only period ended. That’s fine, that method certainly worked quite well until it didn’t work anymore.
A 6% rental yield also sounds like a reasonable minimum expectation to me, provided the property’s location is of sufficient quality.
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Another update. Eventually, an offer came from the second person who viewed it; the first one couldn’t get a loan from the bank.
The offer was about 10k less than what I originally paid for the apartment in the early 2020s. We eventually settled on a price that was less than 5k below what I paid, and the deal was closed this week. So, the profit from four years of ownership remained thin, but considering the rents, it wasn’t a net loss, which I guess I can be satisfied with.
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Housing sales picked up in February, forecasts for price increases are moderate
A big change has occurred in the housing market in a year. While a year ago in January, the number of old housing sales was more than 30 percent below the long-term average, this January it was only about 10 percent behind normal levels. In Oulu and Rovaniemi, housing sales are already proceeding at a normal pace.
“The recovery of housing sales continues, and we expect housing prices to rise by 1.5 percent nationwide this year. In 2026, prices are expected to rise by 2.5 percent, as the third consecutive year of low construction begins to show as a contraction in housing supply,” Kostiainen says.
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Biased reporting. Then in December there was a relative buying spree due to a change in taxation, which I assume caused some of the deals to go into December.
The housing market does anecdotally feel perhaps a bit more lively, but for quite a few months, most of the properties I follow have been hanging for sale.
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