OP Financial Group’s economists predict that home prices to increase by 2.5% this year, said OP in a press release on Tuesday.
Prices will continue to rise in 2026, but a bounce back to peak prices is not expected in the foreseeable future.
Home sales volumes are also expected to increase this year and approach levels seen at the end of the previous decade.
Sentiments in the housing market began to improve during the second half of last year, and numbers of home sales steadily increased.
OP forecasts that the prices of second-hand owner apartments will increase by 3.0 per cent this year.
Next year, prices are expected to continue to increase at a rate of 2.8 per cent.
In 2024, home prices fell by 3.3 per cent on average due to poor market performance in January and the comparatively high prices the previous year.
“The housing market began showing signs of improvement during the second half of last year. Sales volumes have picked up nicely, and prices have remained steady since last winter. While prices are still held down by the high supply of homes following years of busy construction, we are expecting to begin to see a steady increase,” said Joona Widgrén, Senior Economist of OP Financial Group.
The housing market began to recover last year. At the end of the year, sales volumes were just over 5.0 per cent below the average for the years 2015–2019.
According to a short-term prediction model by OP’s economists, sales volumes will continue to improve in 2025.
“Interest rates fell sharply during the second half of 2024, which has already resulted in a boost for the housing market. Lower interest rates improve demand for homes and are reflected in the housing market, as home prices are supported by lower housing costs. As households also benefit form the increase in real disposable income, the prerequisites are in place for a reasonable recovery,” Widgrén said.
OP’s housing market review looks at the development of purchasing power of Finnish homebuyers.
The review also compares the housing purchasing power of Finnish households in relation to other European countries.
Home buyer purchasing power refers to the income available for households to spend on home loan payments, interest expenses and maintenance charges.
“The largest single factor affecting home buyer purchasing power is interest rates, which is why purchasing power weakened sharply especially during 2022 and 2023. Last year, falling interest rates began to improve home buyer purchasing power, even though we are still some way from the levels seen during the years of zero interest rates,” Widgrén said.
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