Finnish housing market sees uptick in sales, driven by first-time buyers

By admin On Dec 4, 2023

A private housing exhibition in Helsinki. LEHTIKUVA

In a remarkable shift for the Finnish real estate market, both OP Koti and the Real Estate Agency Association have reported a significant increase in housing transactions in November 2023, marking a pivotal moment in a sector that has experienced a prolonged downturn.

OP Koti, a leading real estate agency in Finland, reported a 14% rise in the sale of used homes compared to the same period last year, with a staggering 42% increase in the sale of detached houses.

This surge is largely attributed to first-time homebuyers, who have been particularly active in light of the government’s proposed changes to the capital transfer tax. The total number of housing and real estate transactions facilitated by OP Koti in November reached 806, marking the first month of growth in sales volume for the year.

Lasse Palovaara, the director of OP Koti, noted that interest in buying homes, especially detached houses, has significantly risen. This uptick is partly driven by the government’s proposal to amend the capital transfer tax, which would require first-time homebuyers to complete their purchases within the current year to avoid the tax.

Moreover, first-time buyers are not just interested in small apartments typically associated with initial home purchases. “We are seeing a trend where first-time buyers are equally interested in larger homes, including detached houses, where the impact of the proposed tax change is most significant,” said Palovaara.

Concurrently, the Real Estate Agency Association’s reports suggest a similar positive trend across the industry. Tuomas Viljamaa, the association’s CEO, confirmed that small apartments, in particular, have been selling well, with the overall housing market witnessing a 10-20% increase in sales compared to November last year.

Viljamaa pointed out that the rebound in housing sales began in late October, following the government’s announcement of changes in the capital transfer tax and the European Central Bank’s decision not to continue raising interest rates. These factors have provided a more stable foundation for those with housing loans.

Despite the positive signs, Viljamaa cautions that it’s too early to make far-reaching conclusions. The total housing market for the year remains weak, with projections indicating the lowest overall sales volume since 2002 unless December brings a significant turnaround.

The future of the Finnish housing market now hinges on several factors, including the eurozone’s inflation rates, the ECB’s next monetary policy meeting in mid-December, and the broader economic outlook. Viljamaa remains cautiously optimistic, suggesting that if current conditions persist without a deeper recession, the housing market could see a marked improvement in the coming year.

Source: www.helsinkitimes.fi