Small apartments are holding up better than larger homes in Helsinki’s subdued housing market, according to new figures cited by real estate agency Sp-Koti.
The number of sales involving studios and one-bedroom apartments fell by 4.5 per cent year-on-year between January and September, based on data from the Finnish Real Estate Agents’ Association’s price monitoring service.
By comparison, sales of three- and four-room apartments and terraced homes fell by 7.5 per cent, while transactions involving homes with at least five rooms dropped by 13.7 per cent.
Overall housing transactions in Helsinki were down 6.3 per cent from the same period last year. The decline was steeper in neighbouring Espoo, where sales fell by 14.6 per cent, and in Vantaa, where they were down 11.2 per cent.
September alone remained weak, with transactions falling by 10.3 per cent in Helsinki, 20.6 per cent in Espoo and 28.3 per cent in Vantaa compared with a year earlier.
Sp-Koti chief executive Jukka Rantanen says the relative strength of smaller homes is a surprise.
“We have been talking for a long time about extremely weak demand for small apartments across the country,” Rantanen said in a statement.
“The latest figures from Helsinki are now telling a different, more positive and encouraging story.”
Small apartments outperform in selected areas
The change is particularly visible in some parts of Helsinki, including the central 00100 postcode area and Lauttasaari.
In Lauttasaari, sales of studios and one-bedroom apartments fell by 4.4 per cent between January and September, while sales of three- and four-room homes dropped by 14 per cent.
Smaller apartments still account for a large share of the homes currently on the market.
According to Sp-Koti, 7,466 apartments and terraced homes were listed for sale in Helsinki, of which 3,404 were studios or one-bedroom apartments. That represents 45.6 per cent of supply.
In the central 00100 postcode area, their share was even higher at 53.1 per cent.
Rantanen says the supply of the most attractive small apartments in popular areas has already begun to decline.
Investors are returning
There are also signs that small property investors are returning to the market.
Lammin Säästöpankki says demand for financing investment apartments has increased. The bank’s business director Anna-Maija Kuosmanen believes some buyers who have waited on the sidelines now think prices may have reached their bottom.
Investors are paying close attention not only to price and location, but also to the condition of housing companies, upcoming renovation costs and whether the building stands on its own land.
Other indicators also suggest that Finland’s housing market may be moving gradually towards recovery.
Länsi-Uudenmaan Säästöpankki reported a clear rise in mortgage applications in September compared with August, continuing an increase that began in July.
Consumer interest in buying a home has strengthened as well. In September, 12.1 per cent of consumers said they were considering purchasing a home within the next 12 months, up from 11.1 per cent in August.
The increase in applications has not yet translated into a similar rise in completed mortgage drawdowns or housing transactions, meaning any recovery is likely to appear with a delay.
Interest rates also remain a drag on demand, even as consumer confidence and employment prospects have improved.
Despite the stronger signs in Helsinki’s small-apartment segment, the broader market remains weak. Housing transactions in the capital region were down 9.3 per cent between January and September, while sales across Finland fell by 13 per cent from a year earlier.