The residential property market in Finland is characterized by a surge in construction activity, but at the same time, demand remains low. The volume of construction is falling for all types of objects – residential and commercial. According to statistics from Finland, in Q1 2019, the total number of transactions with residential real estate decreased by 25.6% per year to 11,297 units after falling by 3% in 2018 The number of new projects decreased by 3.3% to 8 602 units, and completed – by 5.2% to 8 777 units.
In Finland, from March to May 2019 the construction volume of buildings with licenses decreased by 28.3% compared Q2 2018, and in H1 2019 decreased by 9.2%. Pressure on the market of new buildings is also exerted by a decrease in demand for the purchase of secondary real estate in the country.
Demand is steady. In the first seven months of 2019, total transactions of old dwellings were 31,902 units, almost unchanged from the same period last year. Dwelling starts of residential buildings fell by 9.2% YoY to 21,596 units in H1 2019 while completions were up by 3.7% to 19,702 units. At the same time, residential property prices remain relatively stable with the exception of Helsinki and Vantaa, where prices rose by about 1% last year. The acceleration of internal migration shifts pushes the market of the capital region to increase prices in search of opportunities. According to some estimates, by 2030 more than half of the country's population will live in Helsinki, Tampere and Turku: the number of people in the central region of the country will reach 1.7 million, compared to 1.4 million today. These processes influence the growth of demand for rental of residential real estate, and this leads to an increase in rental prices.
According to the results of Q2 2019, among the major cities of Finland, rental housing on an annualized basis has risen in price in the capital, cities of the Helsinki region and Turku – about 6%. The local population does not show demand for new buildings and continues to live in houses of the past era. Almost 20% of Finnish families live in buildings built back in the 70s of the last century. Half are in houses built after 1980 This is especially true for people under the age of 40, their share is more than 37%.
An increasing number of young people are postponing the purchase of their first apartment at a later age. Now more and more families prefer to rent rather than buy real estate. And only 10% is occupied by apartments located in new residential complexes of the last decade. It turns out that the real estate market can develop under the influence of other drivers - like the demand for buying real estate from foreign investors. The Finnish capital expects its population to grow.
Recently, the Finnish minister said that the country needs immigrants, and the Helsinki authorities said they are counting on approximately 50,000 new residents over the next seven years, with the result that the population will grow to 700,000 by 2025 Until the 2030s, the working-age population of the capital will continue to increase at the current annual rate, mainly due to visitors from other countries. Moreover, according to statistics on the country's preferences, Russians from St. Petersburg distinguish Finland for emigration. Every third Petersburger wants to leave for Finland for good, and among Russians in general this indicator is 15%. At the same time, 95% of Petersburgers and 88% of residents of the Leningrad region have a positive attitude towards Finland. Residents of St. Petersburg choose Suomi due to their good ecology, clean water and quality products.