Finland's housing market has not yet changed for the better since cooling down in the autumn, and home prices are expected to fall by four to six percent next year, according to the OP Financial Group.
The bank said it expects the price decline will be at its most severe at the end of this year and the beginning of 2023.
As other financial institutions have anticipated, OP said housing sales volumes will be lower than in recent years. It noted a 17 percent decline in sales of detached houses during Q3, compared to the same period a year ago.
Apartment prices are also "clearly falling," a statement issued on Wednesday said, which added that the prices of owner-occupied apartments went down by 1.7 percent in the third quarter, compared to Q2.
"Apartment prices have started declining all over Finland, however, the sharpest decline so far has been seen in larger cities, especially in Helsinki and in the prices of small apartments. In the third quarter of the year, the prices of one-room apartments in Finland declined by 3.2 per cent on average, whereas the prices of three-room apartments or larger increased by one per cent compared to the previous year," OP economist Joona Widgrén said in the statement.
The financial group said its economists anticipate housing prices would decline fastest in Finland's larger cities, with decreases of five to seven percent in the Helsinki region and by 3.5 to 5.5 percent in the rest of the country.
"The housing market has turned rapidly and its deterioration will continue at least during the first half of the year. It is possible that the outlook will stop deteriorating during the second half of the year if the uncertainty on interest rates will reduce and the employment outlook will remain good," Widgrén said.
Following years of relatively low interest rates, recent rate hikes are eating up a larger proportion of mortgage-holders' discretionary spending.
"It will not, however, reach the peak levels experienced since Finland's adoption of the euro," the bank said.