Historically Quiet January Sees Housing Trade in Deep Freeze

The real estate market in Finland saw a significant decline in January, with the fewest transactions reported to the statistics service in the industry’s history. Housing transaction volumes fell to their lowest level in at least 25 years, as several factors contributed to a slowdown.

One of the main reasons for the decline was the removal of the tax exemption for first-time home buyers at the turn of the year. This boosted housing sales at the end of 2019 but had no effect in January. Additionally, predictions of a rapid drop in interest rates turned out to be wishful thinking, further dampening consumer confidence.

In January, KVKL reported that old apartment sales decreased by almost ten percent from January of last year, despite predicting that trade would be at last year’s level. The service has been in use since 1999 and has never seen a month as weak in trading volumes as last month.

Home loans euribor rates were expected to fall rapidly this year, but economists have relaxed their forecasts due to an upward change in interest rate forecasts. KVKL’s CEO Tuomas Viljamaa believes that this may reflect on housing sales and consumer confidence. Furthermore, strikes and government austerity pressures seem to have eroded consumer confidence and apartment purchase intentions.

The government and Financial Supervisory Authority have taken measures to accelerate sluggish housing sales and construction, including reducing transfer taxes on housing shares and real estate immediately and removing transfer tax exemptions for first-time home buyers at the turn of the year. The Financial Supervisory Authority also returned mortgage ceilings back to 90 percent and increased maximum amounts of ASP interest subsidy loans intended for first-time home buyers from April onwards.

The average price per square meter of old apartment buildings fell by 1.1 percent in the capital region and four percent in other large cities compared to December, while sales times were slightly longer than usual due to low trading volumes.

By Editor

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