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HomeEconomyHousing Market Perks Up Before Year-end Tax Change

Housing Market Perks Up Before Year-end Tax Change

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For several major Finnish real estate firms, November was the strongest sales month of the year for pre-owned homes. However, the upturn has not yet had a significant impact on sales of new properties.

Kiinteistömaailma said that its sales of used apartments grew by almost 20 percent in November compared to a year earlier. At Huoneistokeskus, sales were about 15 percent better, while OP Koti reported a 14-percent uptick.

According to Topi Salmi, COO of Huoneistokeskus, the acceleration of housing sales has been most evident in growth centres such as Tampere, Helsinki, Espoo and Vantaa.

First-time buyers rushing to the market

The rise in housing sales is partly due to the looming closure of the transfer tax exemption at the end of the year. That has motivated many would-be first-time homebuyers, say industry insiders.

According to Nordea economist Juho Kostiainen, in addition to the stabilisation of interest rates and the slowdown of inflation, first-time homebuyers are playing a key role in boosting housing sales.

He predicted that the removal of the tax exemption will have a knock-on effect on other buyers on the market, due to chain effects in housing sales.

Such chains are created when buyers make bids on properties that are conditional on the sale of their own homes. Buyers who do not have their own homes for sale can resolve such chains.

“When a first-time home buyer buys an apartment, that can trigger several other sales by people who are switching homes, as the chain unravels from the beginning,” he noted.

In addition to smaller flats apartments, first-time homebuyers are also buying detached and terraced houses.

Buyer’s market may be over

Currently, the housing sector is a buyer’s market. Supply exceeds the demand, and prices have been dropping exceptionally steeply for more than a year.

The director of OP Koti, Lasse Palovaara, believes that the price base for apartments has now been reached. He sees a return to rising prices as close at hand.

Kostiainen agrees that the drop in prices is over for now. However, the development of interest rates will be the indicator of the direction of future price levels, he said.

“If interest rates start to fall, that may also be the driver that starts to raise housing prices,” he said.

Source: Yle

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