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Finland's housing market heading for price slowdown

Housing market price growth has cooled off the most in the capital region, according to Nordea.

Interest rates on housing loans are likely to continue to increase for the next couple of years, according to Nordea. Image: Petteri Bülow / Yle

The OP Financial Group and bank Nordea forecast that the growth in housing prices in Finland will slow down this year and next, after 2021’s period of exceptional growth.

According to OP bank's latest forecast, housing price changes next year will remain between -0.5 and +0.5 percentage points, due to rising interest rates, inflation, and slowing economic growth.

While housing prices have gone up this year, the rate of increase has slowed.

According to Nordea, the capital region has seen the biggest slowdown, owing to a lack of demand for studio apartments, an excess supply due to increased housing construction in the region, and an outflow of people from urban centres.

The bank stated that interest rates on housing loans were already on the rise, and predicted that the trend would continue for the next couple of years.

The reference rate for most housing loans is based on the 12-month euribor rate, which markets predict will rise by roughly two percentage points next year.