The Finnish housing market is facing a major transformation, which is hardly talked about openly enough. A recent study by OP Pohjola reveals that nearly 30% of all homes in Finland will be released onto the market over the next 20 years as elderly homeowners move into care homes or die. This “grey tsunami” could revolutionise the housing market in a way that many buyers are not prepared for.
Statistics tell a harsh truth
The figures reveal a startling reality: more than half of all owner-occupied homes in Finland are already owned by people over 60. As the share of older people in home ownership increases further in the 2030s, the market will be flooded with housing in areas where demand is already weak.
Eastern Finland and smaller municipalities are particularly hard hit. In the larger cities, the impact will be less pronounced, but housing prices are already high there. This creates a two-tier market situation, with regional disparities widening further.
Optimism from banks and industry does not tell the whole story
The Central Federation of Real Estate Agents and the banks are signalling cautious optimism. KVKL’s CEO Tuomas Viljamaa says that prices for second-hand apartment buildings in large cities have risen moderately during the first part of the year and sales periods have shortened. Economists at OP Pohjola also predict that house prices will start to rise by around 3% in 2027.
But there is a danger in this optimism. Bank forecasts often focus on short-term developments and large cities. They do not take sufficient account of the long-term effects of demographic change. Housing sales were 18.5% lower in April than a year earlier, and new home sales remain “very quiet”.
Reality check for buyers
For home buyers, the situation is complicated. In the short term, there may be price increases in the big urban markets, which may tempt people to buy before prices “get out of hand”. But a longer perspective tells a different story.
With almost a third of the housing stock coming onto the market over two decades, supply will increase significantly. This does not necessarily mean that prices will collapse everywhere, but it does mean that buyers will have more choice and bargaining power.
The challenges for housing companies are deepening
Price stagnation or even a prolonged decline creates a serious challenge for housing companies. When house values do not rise as expected, residents’ enthusiasm for major renovations and improvements wanes. The board of directors of the housing company has to balance the need for necessary repairs with the ability of residents to pay – especially when many apartments are owned by elderly owners whose incomes may not be sufficient to pay large extra fees.
This can lead to a build-up of repair debt, further reducing the value of the property and making it less attractive to buyers. In the worst case, a vicious circle is created where the deteriorating condition of the property drives down prices even further.
What does this mean for you?
If you are planning to buy a home, don’t let the banks and estate agents rush you. Demographic changes do not happen overnight, but they are inevitable. Think carefully:
- Is your destination an area where demand will remain in the future?
- Are you prepared for the possibility that the value of your home may not rise as expected, or at least not as you have typically learned to expect?
- Will you be able to pay your loan even if house prices and therefore collateral values do not rise?
- What is the financial situation of the housing company and the need for future repairs?
In a changing market situation, it is even more important than everto get to know your target market thoroughly. The housing company’s finances, renovation history and future investment needs can determine whether a home is a real investment or an expensive burden. With the help of a professional, you can get a clear picture of what you’re really buying – before you make perhaps the biggest financial decision of your life.
The grey tsunami is slowly but surely approaching. The wise buyer will take this into account now when making what could be the biggest financial decision of their life. Don’t settle for half measures from banks and brokers – demand all the information on the table before you sign anything.
Are you buying a home in a changing market?
As supply increases and bargaining power improves, the importance of documentation will become even more important. OUN® will read your housing company’s documents for you and tell you what they really mean – before you sign anything.
