SKVL housing market forecast: Sales of old homes will gradually pick up – no changes expected in prices – falling interest rates help – banks slow down a lot

Supply at a good level – Demand clearly increased towards autumn

According to SKVL's willingness to buy indicator, home sellers are now motivated. The desire of buyers to make a purchase decision has significantly increased. From the sellers' point of view, the lower price level has mainly been understood, and now things are starting to happen in the market as buyers sell their own apartments.

Traditionally, price increases are hindered by demand not exceeding supply. In principle, there is now a situation that is good for buyers, as the assortment as well as the price level are attractive.

"We expect the total trade volumes in 2024 to remain at the same level as in 2023. The reason for this is that even though trade volumes are accelerating now in the autumn, the pick-up at the end of last year for a while was so strong that it is not yet possible to rise above it. Next year, if interest rates fall close to 2%, we believe that trade will pick up clearly after the snowy winter in the spring," Mannerberg estimates.

Banks have not kept pace – significant delays in closing deals

The market has picked up by a few percentage points since the summer. At the same time, backlogs in mortgage processing have increased significantly. We regularly see delays of more than 1 month in the processing of matters and up to 2-3 months go by when the deals are closed after the offer.  This causes a lot of difficulties for apartment exchangers in multi-apartment chains, where even the last sale depends on the completion of previous transactions in the chain.

The new e-commerce systems have not made matters much easier, as they are also handled by a bank. "Banks are now expected to engage in much more flexible cooperation and training in new operating methods that brokers already have a good grasp of," says Jussi Mannerberg, CEO of SKVL.

There are also strange phenomena in the financing of housing transactions

 

There are still some buyers who make brazenly low bids, but most of the time they only lead to resentment and no deals are made. Price awareness among buyers and careful examination of the apartment before making a decision is very typical. "Now that banks are too demanding on the condition and age of the home, it causes a significant decrease in the value of national assets. You can't get credit if there is even a small question mark in the condition inspection," laments SKVL's Mannerberg. Often the age of the house alone is reluctant for the bank to make a loan decision, even if the house is in excellent condition," he continues. At the moment, we are also seeing really strange phenomena at municipal borders, where credit is easier to obtain in one municipality than a few kilometres away in another. Especially the larger banks are overcautious here and hinder home and house sales in many areas.

"It's quite sad that people can't buy affordable apartments where they want," says Mannerberg, CEO of Finland's largest network of brokers.

Holiday homes have sold better this year

 

The most demanded type of holiday home is still a house with good amenities on the shore of a big water. Board cabins on the beaches will also be of interest to buyers. The possibility of year-round use in a holiday home is a significant factor in the choice. In particular, the attractiveness of so-called dry land grandma's cottages has decreased after the coronavirus period, and the only factor facilitating their sales is the attractive price level.

Holiday home sales have returned to the level they were at before the coronavirus epidemic and have picked up slightly from last year. The price level has come down somewhat. Somewhat surprisingly, luxury cottages have been in demand and have also been traded with foreign Central European buyers. Global warming is also beginning to show for many as a motive to buy a holiday home further north than in Central Europe, which is hot in the summer. The demand for island cottages is clearly slower except in the most popular river basins in Southwest Finland, Uusimaa and South Savo.

Rental housing market

Investors are on the move, but not quite as much as in the previous quarter. About 7% of trades were made by investors. Further north in Finland, the share of investors is higher. In market conditions, it is typical for larger foreign investors to buy larger bundles of apartments in Finland. Retail investors have bought some apartments for their children since the housing allowance changed this year.

The demand for rental apartments remains unchanged and the seasons are autumn and the beginning of the year as study places become clear. As well as other seasonal workplace areas, such as holiday resorts in Lapland, are examples.

The supply of rental housing will remain high and in practice prevent significant changes in the rent levels of new leases. In particular, cuts in housing allowance have affected the level of rents.