New buy-to-let loans have been taken out every month this year in greater numbers than during the same period in the previous two years. Photo: Saara Peltola / Lehtikuva
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Property investors in Finland are gradually re-entering the housing market, with fresh data showing a consistent rise in new buy-to-let loans for the first half of 2025.
According to figures released by the Bank of Finland, investment property loans totalled €696 million between January and June, an 18 percent increase compared to the same period last year. In June alone, €120 million in new investment loans were issued, up from €96 million in June 2024.
Although the volumes remain modest compared to overall mortgage activity, the trend marks a reversal from the sharp decline that followed the market peak of the early 2020s.
“There’s been a noticeable uptick for some time now,” said Eemeli Karlsson, chief economist at the Finnish Landlord Association. “But it’s still too early to declare a full recovery. Investors remain cautious.”
Karlsson pointed to the association’s spring barometer, which showed that roughly one in four investors planned to buy property within the next 12 months. Among large-scale landlords, that figure rose to nearly 50 percent.
The overall share of investment loans remains relatively small. At the end of June, Finland’s total housing loan stock stood at €105.7 billion, with investment loans accounting for €8.9 billion — just over eight percent.
Regional variation is now a key feature in the recovery. Investor interest is strongest outside the Helsinki region, particularly in mid-sized cities where rental markets are more balanced and, in some areas, showing signs of scarcity.
“In cities like Vaasa, we’re already seeing a shortage of rental housing,” said Karlsson. “It’s a different story from the capital region, where oversupply continues to weigh on returns.”
High vacancy rates in Helsinki are discouraging new investment. At the same time, banks have tightened lending criteria, adding further pressure on potential buyers.
Interest rates no longer appear to be the main obstacle. The 12-month Euribor is currently around 2.15 percent. In June, the average interest rate for new investment property loans stood at 3.1 percent.
“At three percent, the numbers work for investors,” said Karlsson. “If your investment doesn’t break even at that rate, the property is probably overpriced.”
He also warned that past habits of relying on rapid property value growth without factoring in rental cash flow are no longer sustainable.
“During the boom years, some investors bought purely for appreciation, even with negative cash flow. That strategy isn’t working anymore,” Karlsson said.
A new factor now shaping the rental market is the August shift in student housing support. Students have been moved out of Finland’s general housing allowance system and back under the study grant’s smaller housing supplement.
According to Karlsson, this change is already pushing students into cheaper rental units, shared flats, and dormitories.
“Students played a big role in boosting demand for studio apartments. That demand is now softening,” he said.
Looking ahead, Karlsson believes property investment in Finland will require more discipline and selectiveness.
“I don’t believe the rental market will permanently weaken for investors,” he said. “But going forward, success depends on choosing the right property and ensuring a positive cash flow.”
HT
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Source: www.helsinkitimes.fi
