Finland: Only small corona effects on the housing market so far
- Surprisingly small effects from the corona outbreak on construction activity in Finland.
- Stimulating monetary policy continues to boost supply through cheap funding costs for constructors and demand both through the cheap funding channel and lack of alternative investments.
- The coronavirus paused the housing market in spring, but the recovery started already during the summer.
- The decrease in house prices has been modest. The prices of old dwellings fell by 0.4% in the whole country in Q2. The outlook continues to be dual between the growth centers and the rest of country.
The overall impact of the corona crisis on the Finnish housing market has been milder than expected. Urbanisation still dominates the aggregate picture. The increase in prices in the Greater Helsinki region and some other larger cities continues to support the average price development in Finland. Low-interest rates and the flexibility of banks have also made owning a house more attractive, and the consumer confidence indicator shows that the current crisis has not dampened customers’ intentions to buy a house. Housing prices in the whole country will decrease slightly in 2020, but we expect that the recovery will start already during next year.
Even though the corona crisis has revealed some downsides of urbanization, the data on real estate prices indicates that the desire to live in cities has not disappeared. Contrarily, despite the fact that remote working may be a more permanent solution in many workplaces in the future, urbanization and the increase in regional differences in prices are expected to continue in Finland.
Heidi Schauman, Chief Economist in Finland (firstname.lastname@example.org, +358 503 281 229)
Sonja Liukkonen, Junior Economist in Finland (email@example.com , +358 400 982 159)