Housing market starts to gain momentum: SKVL

The year for the housing market starts with a capital drive and the demand for small apartments, which has been quiet for a long time, is now on the rise, according to the forecast published on Wednesday by Finnish Real Estate Agents’ Association (Suomen Kiinteistönvälittäjät ry)- SKVL.

The peak in demand at the end of last year is now likely to remain at the new normal level and bring the expected balance to the market, said SKVL in a press release.

The demand for newer and well-maintained single-family houses continues to be the strongest of all housing types.

Especially Helsinki, Espoo, Vantaa and Tampere have now woken up and the outlook in these areas is strong.

"SKVL's purchase intent indicator saw the biggest turnaround in the entire measurement history at the turn of the year," said Jussi Mannerberg, CEO of SKVL , adding that there has also been a clear upward turn in willingness to sell.

The forecast made by SKVL's member professionals estimates that compared to the strong fourth quarter at the end of 2023, the beginning of 2024 will continue to be a period of growth.

"The market backlog that has lasted for more than a year is now starting to clear at a reasonable pace," Mannerberg said, adding that the forecast now shows a continuous increase in demand for family homes.

In light of the actual figures for 2023, it can be seen that the biggest changes in the sale of old dwellings took place in the sale of small dwellings. However, on average, sales of family homes were much better than many might imagine. During the last quarter of 2023, sales of small dwellings also increased as first-time homebuyers flocked to attractive price levels.

The impact of the fall in Euribor rates is the biggest contributor to the acceleration of the housing market.

"We certainly expect action from the ECB. Finns are resilient, but now we need help from Europe in the form of lower interest rates. Inflation figures in Finland have fallen rapidly and the ECB has put the brakes on the ECB due to the still somewhat higher inflation readings in larger countries," said Mannerberg.

"There is a small risk that inflation in Europe will temporarily start to rise slightly again if global crises, such as challenges in international shipping near the Middle East, increase costs," he added.

The rental housing market continues to grow slightly. The appeal of larger rental apartments is still greater. Rent levels are not expected to change in the free market.

The full-year forecast, which is the most challenging, estimates that the number of housing sales will grow by about 5–10 per cent for single-family homes, semi-detached houses and terraced houses. No significant price increases are expected at the moment, but prices are likely to rise by 1–3 per cent in 2024 for newer single-family houses that are most in demand. Sales of old apartments in blocks of flats are also expected to grow moderately and prices to grow by a small 1–3 per cent, mainly in the Helsinki city center and Espoo. These changes are likely to take place in relation to the actual price level and should not be confused with the clearly higher prices of a couple of years ago.

There are still no high expectations of growth in sales of new apartments in blocks of flats. The year 2024 will be a search for a fresh start, and new construction project starts are likely to be seen closer to 2025. Trade volume is forecast to fall further by a few percentage points.