Market development in 2017
Housing Finland and CEE
Consumer confidence picked up in Finland during the review period, which was reflected in good consumer demand. There were no signs of overheating, however. Supply rose to a high level during the year. In addition to the demand focusing on affordable apartments in growth centres, the demand for bigger apartments improved.
Residential investors were more selective and demand was particularly focused on the Helsinki metropolitan area, Turku and Tampere.
In the CEE countries, consumer confidence was at a good level, particularly in the Czech Republic and has improved substantially from the start of the year, especially in Latvia. Residential demand was mainly brisk in the CEE countries.
The prices of new apartments increased slightly on average and the shortage of resources in the CEE countries created cost pressure especially in the Czech Republic and Slovakia.
Mortgage interest rates were at a low level in all operating countries and the availability of financing was good. In Finland, the volume of new mortgages increased slightly from the previous year.
Russian consumers were cautious in their apartment purchasing decisions in spite of the economy improving. The decline in consumer purchasing power levelled off during the year and consumption turned to slight growth late in the year.
Residential demand was moderate but started to improve during the year in the Moscow region and, towards the end of the year, also in St. Petersburg. The Russian Central Bank lowered its key rate several times during the year and may lower it further in the early part of 2018, which was partly reflected in the residential demand. The interest rates for mortgages for new apartments fell below 10 per cent. Residential prices remained stable on average and supply remained high.
Business Premises and Infrastructure
Investor interest in business premises located in Finland’s major growth centres was at a good level. The yield requirements of office and retail properties decreased in the Helsinki metropolitan area, and the rental levels for prime properties increased in central Helsinki. The favourable market climate in Finland supported private investments. The business premises contracting market and the infrastructure construction market were active especially in the Helsinki metropolitan area and other Finnish growth centres.
In the Baltic countries and Slovakia, investor demand for business premises was strong and rental levels remained stable. The contracting market has remained stable in the Baltic countries.