OP Financial Group's economists expected home prices to increase much more in 2025 than this year, said OP in a press release on Wednesday.
Prices will continue to rise in 2026, but no rapid price increase is to be expected. In the short term, sales volumes are expected to approach pre-pandemic levels.
In 2024, sentiment in the housing market was weak and expectant. The decline in prices was more modest than in the previous year. At the end of the year, promising market signs have been detected following the drop in interest rates.
"There are signs of the housing market picking up, with sales volumes increasing notably since the beginning of the year. Prices have remained somewhat stable for months, and the decline in prices has levelled off. Increasing sales volumes and decreasing interest rates predict a rise in prices," said Joona Widgrén, OP Financial Group's Senior Economist.
OP forecasts a 2.8 per cent increase in home prices. The prices of old owner apartments are expected to increase by 2.5 per cent in 2026.
According to estimates, prices are believed to have decreased by 2.5 per cent this year.
A pick up in home sales began after the summer, and sales have been considerably more active this autumn than earlier in the year.
According to the short-term prediction model used by OP's economists, average home sales volumes are expected to reach the level seen in 2015–2019 in the first half of next year.
Interest rates have come down steeply in the past few months, and this has already been seen in the housing market. However, the biggest impact will be seen with a delay in prices rising especially next year.
In the long term, home ownership is usually a financially smarter solution than a rental home
The price of home ownership compared to home rentals has been examined in OP's housing market review.
Although renting has in some cases been less expensive than owning in recent years, home ownership is often a financially smarter solution in the long term.
“The steep rise in interest rates made home ownership more expensive due to higher financing costs. Meanwhile, rents have increased very little or remained unchanged. In the past two years, costs have been lower for many renters than for owners.”
However, home ownership is usually financially more advantageous in the long term. According to the example calculations of OP's economists, the owner of a home costing €260,000 accumulates over €400,000 in wealth over a 25-year loan term, assuming that home prices increase annually by 2.0 per cent.
A person living in an equivalent rental apartment who pays a monthly rent of €900 and saves the difference between home ownership expenses and rent every month at an annual return of 5.0 per cent accumulates around €280,000 in savings over 25 years.
In both calculations, the initial capital is 10 per cent of the home purchase price. In the example calculation, the home owner accumulates as much as €150,000 more in wealth in the long term.
"Big leverage benefits the home owner when prices increase. Another positive aspect of home ownership is that it forces you to save every month in the form of the loan principal repayment. Nevertheless, you should choose your housing type based on your needs, financial circumstances and life situation," said Widgrén.
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Source: www.dailyfinland.fi
