HS: Finnish home builders negotiate prices to spur sales

EVEN THOUGH interest rates on housing loans have fallen and the prices of old homes have seemingly started creeping up, Finns remain hesitant to invest in new-built homes, reports Helsingin Sanomat.

Euribor 12, the most popular benchmark rate for housing loans in Finland, fell to an over two-year low of roughly 2.4 per cent last week.

Statistics Finland, meanwhile, published preliminary data indicating that the prices of old dwellings in housing companies crept up by 0.4 per cent year-on-year in October, representing – if the data prove correct – the first year-on-year increase since September 2022.

New-built homes currently account for only a tenth of real estate sales in the capital region, marking a sharp drop from their previous share of roughly a third, according to a report by Helsingin Sanomat on 27 November.

The capital region alone has thousands of vacant new homes. Oikotie had about 3,650 vacant net homes in the region on its listing service, including 1,930 in Espoo, 1,240 in Helsinki and 490 in Vantaa. Helsingin Sanomat wrote that some of the leading residential constructors have become increasingly willing to entertain offers and enter into negotiations over price and other terms to spur the sales of new homes.

YIT, for example, has sold only 17 of a 48-unit block of flats called Espoon Esplanadi in Westend, Espoo. The units are listed at prices ranging from roughly 500,000 to 1,500,000 euros.

“At the moment, we’re negotiating intensively about both prices and other terms related to the transaction,” Pekka Helin, the director of housing services at YIT, commented to the newspaper. “We’re trying to reach a solution that satisfies both parties. There isn’t a specific amount [for discounts]. Let’s just say that we’ve got a variety of offers. People may ask for discounts of up to 30–40 per cent, but these aren’t something we’re prepared to do.”

The company has refrained from adjusting the listing prices because the values were determined at the start of construction.

“The value is made up of the price level in the area. In Westend, for example, you’re in a high-end area. You can’t say the prices are inflated. We won’t start talking about the margins of individual flats,” said Helin.

Overall the construction giant has yet to find buyers for roughly 600 new-built homes in the capital region. Helin attributed the muted demand for new-built homes to sagging consumer confidence in both their own finances and the national economy.

JM Suomi, which has nearly 220 unsold new homes in the region, has similarly found it difficult to finalise sales without price negotiations, confirmed CEO Markus Heino. He revealed to the newspaper that the reductions are determined on a case-by-case basis depending on factors such as supply in the neighbourhood.

“In some cases, the discounts are minuscule, in others we can make concessions of over 10 per cent,” he said.

Skanska, which is sitting on nearly 300 unsold new homes, has similarly engaged in negotiations over prices and other terms, Marja Kuosma, the head of sales and marketing at Skanska Kodit, said to Helsingin Sanomat. She added that the market has started showing signs of improvement, such as an increase in the number of people attending viewings.

“Hopefully the next move is that they have the courage to make a deal,” she added.

Aleksi Teivainen – HT