The price of apartments in Finland will continue to fall, according to Juhana Brotherus, the chief economist at Hypo, the Mortgage Society of Finland.
Brotherus blamed the declining prices on accelerated inflation not being brought under control. The good news, however, is that he does not see indications of a housing market collapse.
"Of course, the housing market has cooled down, but it has cooled roughly to averages seen before [the Covid pandemic]," Brotherus told news agency STT.
Compared to the third quarter a year ago, prices fell by 1.7 percent during July to September, according to preliminary figures from Statistics Finland. However, overall prices rose by 0.3 percent, compared to Q3 a year ago.
Brotherus said that the Covid period prompted a buffer within the housing market.
"There's not a reason to fear a larger crash, because the situation is reasonably stable to begin with," he explained.
Flat prices fell by 3.9 percent in larger cities and by about one percent in the rest of the country.
Brotherus noted that the price declines hurt property investors the most. He said interest rate hikes eat away at the returns on housing investments, because rents aren't keeping up with expenses and depreciation also reduces a property's value.
On the other hand, he said, the growing price of small apartments in recent years was prompted by property investors.
"Now you can see that, like all investments, investing in housing involves risks," Brotherus said.
In the capital region, the prices of new apartments rose by 5.8 percent and by 6.3 percent in the rest of Finland, according to Statistics Finland's preliminary figures. However, the decline in sales of new apartments reached as much as 47 percent during Q3, year-on-year.
Brotherus further noted that the increase in new apartment prices was due to their construction in areas with high demand.
Would you like a roundup of the week's top stories in your inbox every Thursday? Then sign up to receive our weekly email!