Despite the slowdown in inflation and the gradual decline in interest rates, economic uncertainty and weak consumer confidence continued to depress the housing market and construction activity in 2024. The housing market remained subdued and the amount of housing construction remained clearly below the targets set for Helsinki.
Housing production lower than in previous years
The difficulties in the operating environment continued to be reflected in housing construction and decreased the total production volume to a lower level than in previous years in Helsinki. A total of 4,061 dwellings were completed in the city during the year, and the target of 7,000 completed dwellings in accordance with the Implementation Programme on Housing and Related Land Use was not achieved. Although the number of completed dwellings was clearly lower than in earlier peak years, it nearly corresponded to the average annual production of the 2000s, namely around 4,500 completed dwellings per year. There were housing production initiatives for 2,931 dwellings, and building permits were issued for 3,609 dwellings.
For several years starting from 2018, the number of dwellings under construction in Helsinki remained at roughly 10,000. This number decreased from these peak years to approximately 5,700 dwellings at the end of 2024. The lower rate of housing production means that the completion of dwellings will increase is increasing in the coming years at the earliest. Based on the housing production forecast prepared in Helsinki in 2024, the rate of construction will remain at a lower level in 2025, and we could reach the target for housing production as we approach the 2030s.
Real estate business still lagging behind peak years, housing prices falling
In 2024, housing sales were roughly at the 2023 level, but the number of units sold lagged considerably behind the previous peak years.
The development of the number of housing units sold is hindered by the rise in interest rates and other costs of living and the phase of the economic cycle on the whole. In addition to consumer demand, investor demand has been weak in the Helsinki housing market in recent years.
Housing prices decreased further in Helsinki in 2024, which is a result of the housing market situation described above. On average, housing prices decreased by 4.5%. However, the decrease in housing prices was less pronounced than in 2023, when housing prices decreased by 8%.
Situational picture of the housing market and construction, outlook for coming years
The outlook for the housing market and construction activity for the coming years is cautiously optimistic. More homes will be needed in the near future as strong population growth continues.
The housing market may start to pick up due to a boost caused by decreasing interest rates, population growth and the restoration of consumer confidence. If the European Central Bank (ECB) continues to decrease key interest rates, it is expected to support borrowing and strengthen housing demand both on the consumer and investor side. On the other hand, the abundant supply of new housing combined with constant economic uncertainty may still slow down the recovery of the market.
