Finnish Real Estate Market Struggles as Sales Plummet 14%

Finland’s housing market experienced a significant downturn in March, with total property transactions falling by more than 14 percent compared to the same period last year.

Data from the Finnish Real Estate Federation shows a total of 4,311 housing transactions nationwide during the month. This included 4,222 sales of existing homes and just 89 deals for newly built properties.

The broader Finnish housing market has been under severe pressure due to high European Central Bank interest rates. Because the vast majority of Finnish mortgages are tied to variable Euribor rates, home buyers in Finland feel the impact of increased borrowing costs almost immediately.

Sales of new homes dropped by more than half from the previous year. Transactions for existing homes fell by 12.6 percent.

Tuomas Viljamaa, chief executive of the federation, stated that the total number of transactions fell by about 14 percent nationwide in March.

The downturn was felt across most of the country, with cities like Oulu, Tampere, and Lahti seeing the sharpest declines. Only the Kainuu region recorded an increase in sales for the month.

House prices continued to fall in the Helsinki metropolitan area, driven by an increasing supply of available properties. Average prices for existing flats in the capital region fell by 1.7 percent compared with February and by nearly 5 percent year-on-year.

The market is currently saturated with homes for sale, standard rental units, and vacant right-of-occupancy housing. Right-of-occupancy is a uniquely Finnish system where residents pay an initial fee and a monthly charge, functioning as a middle ground between renting and owning.

Supply-Demand Imbalance Drives Continued Price Declines

Viljamaa pointed to an imbalance between supply and demand as the reason prices have continued to decline in the capital region.

There is a clear divide in the market based on property type. Prices for larger family homes have remained stable, while the value of smaller apartments has dropped.

Demand is focused on family-sized housing, while supply is concentrated in smaller units, according to Viljamaa. This mismatch has weighed heavily on overall price development.

Despite the low transaction volumes, the time it takes to sell a property has shortened slightly. The average time to sell flats in the capital region fell to 114 days, while detached house sales dropped to 134 days.

However, overall activity remains exceptionally low, with transaction volumes in March sitting more than 25 percent below the five-year average.

This market stagnation has severely impacted the Finnish construction industry, which has faced a wave of bankruptcies over the past year as new building projects stall.

The federation is calling for policy changes, such as adjustments to transaction taxes and incentives for first-time buyers, to restore confidence. Viljamaa suggested that financing reforms, including longer mortgage terms, are necessary to support demand.

The housing market must be restarted so that construction and the wider property sector can recover, Viljamaa said.