The Finnish economy is recovering, nothing can stop urbanization, and interest rates on loans are falling, says the Mortgage Society of Finland, a home financing organization better known in Finland as Hypo.
"Soon we might even be able to enjoy a 1970’s-like atmosphere, when inflation took care of housing debt," the latest Hypo housing market forecast even went so far to say.
Established 155 years ago in the heart of Helsinki, Hypo is Finland’s leading home financing specialist. Hypo's chief economist Juhana Brotherus says the most important reason for the housing market boom is the general improvement in the economy and the resulting uptick in consumer confidence.
"All of the housing market metrics are showing green and construction is at full throttle. Building was started on more new housing blocks at the end of last year that at any time since the early 90s," he says.
Negative interest rates help
Hypo says experts are right to be considered about potential rising interest level rates, but that such concerns may be premature. No major changes in the Euribor rates are on the horizon either.
Almost all home loans in Finland are tied to the daily Euro Interbank Offered Rate (Euribor) reference rate, which is currently negative. In a 2014 bid to boost the economy, the European Central Bank decided to drop the Euribor to below zero to give banks the incentive to lend money rather than hoard it and get consumers to spend rather than save.
Hypo also says that housing prices in Finland show no sign of a bubble, even in Helsinki. In fact, the financing company predicts that prices will continue to grow by some 4 to 6 percent in the growth centres of Helsinki, Turku, Tampere and Kuopio.
"The largest price increases concern small flats, which are being snapped up before their first showing," says Brotherus.
Hypo publishes a housing market forecast four times a year in Finland.