Ten years, eight countries and one exception
This article has been translated from Finnish with the help of automated translation. The Finnish original is the authoritative version.
A Finnish home costs less today than it did ten years ago. That has not happened to any of our neighbours. We wanted to know why, so we took the statistics for all eight Nordic and Baltic countries from the same source and looked at them side by side.
Illustration, produced with artificial intelligence
The reason for the stickiness of housing prices was found in two places. Once it was found, it turned out that for an investor this story ends differently from how it begins.
The starting point: one table
We gathered ten years of figures on the development of housing prices in eight different countries. The figures come from the same source and use the same definition, so they can be compared side by side.
The third column shows the development of real housing prices. That is what decides the matter, because an investor's return does not show up in purchasing power if inflation has eaten it.
| Housing prices 2015–2026 | Nominal change | Inflation | Real change |
|---|---|---|---|
| Lithuania | +177% | +57% | +77% |
| Iceland | +166% | +33% | +99% |
| Estonia | +129% | +63% | +40% |
| Latvia | +126% | +52% | +49% |
| Norway | +67% | +41% | +19% |
| Denmark | +61% | +21% | +33% |
| Sweden | +37% | +33% | +3% |
| Finland | −3 % | +23% | −21 % |
Finland is the only country on the list where price development over ten years is negative. The gap to the next weakest is 24 percentage points and to the average of the list 58 percentage points.
The easy explanation would be interest rates. It does not hold. The same interest rate cycle ran through every country. Sweden and Denmark dipped in 2023 just as Finland did. Both turned round the following year. In Finland a fourth consecutive year of decline is under way. Elsewhere it is not.
The first explanation: the labour market
In June 2026 the unemployment rate was 4.5 per cent in Norway, 6.5 in Denmark, 6.6 in Estonia, 8.9 in Sweden and 10.3 in Finland. Finland is the weakest on both measures, and the order repeats too precisely to be coincidence.
We looked at each country separately, and separately again on either side of the financial crisis. Sixteen measurements, the same result every time: when unemployment rises, prices fall. Not one exception.
The reason is mundane. A person buys a home when they have a job. Without a job there is no loan to buy a home, and the home goes unbought.
The second explanation: a loan that does not exist elsewhere on the same scale
A Finn often buys a new home with two loans, only one of which is in their own name. The housing company takes on debt and the buyer pays it through the financing charge. At its peak the housing company loan covered 60–70 per cent of the debt-free price in new developments, so a third in cash was enough to complete the purchase.
A similar structure also exists in Sweden, Norway and Denmark. The scale, however, is not the same. Finland's figures look like this:
| Loan stock | 2010 | 2026 | Change |
|---|---|---|---|
| Loan stock of housing companies | €12.1 billion | €46.5 billion | +284% |
| Household mortgages | €76.2 billion | €105.4 billion | +38% |
The debt of housing companies almost quadrupled. Households' own mortgages grew by a good third over the same period. The pace was 10–18 per cent a year right up to 2019. This year it is 1.4 per cent. The phenomenon happened, and now it is over.
One question remains. Did that money raise prices, or did it only make construction more expensive? There is a direct answer, because each has its own statistic, summarised below.
| Index, 2015 = 100 | 2016 | 2019 | 2021 | 2023 | 2026 |
|---|---|---|---|---|---|
| Prices of new homes | 102 | 111 | 121 | 125 | 122 |
| Construction costs | 100 | 104 | 110 | 122 | 125 |
| Difference | +2 | +7 | +12 | +3 | −3 |
The price of a new home ran away from the cost of building it in exactly those years in which the housing company loan stock grew. The gap stretched to twelve index points. Costs rose only later, so they do not explain the difference.
Since 2024 the prices of new homes have been below the cost of construction. The ”excess price” of new homes has therefore melted away. It has not disappeared because prices fell, however, but because construction costs caught up with it.
Where the correction landed
This is where the story turns. This is the most surprising part.
One would expect the excess price to unwind where it arose. That is not what happened. New homes have fallen three per cent from their peak. Existing homes have fallen fifteen.
The gap between new and existing homes has widened every single year since 2015. From zero to 28 index points.
| Index, 2015 = 100 | 2015 | 2019 | 2022 | 2026 |
|---|---|---|---|---|
| New homes | 100 | 111 | 126 | 122 |
| Existing homes | 100 | 104 | 110 | 94 |
| Difference | 0 | +6 | +16 | +28 |
The reason lies in the simple economics of construction. A builder does not sell below cost. He leaves it unbuilt.
And so it did. Housing starts over the past year numbered 15,748, close to the floor of the entire measurement history. The price tag of a new home therefore did not give way. Instead production stopped, transaction volumes collapsed and the price of the existing housing stock fell.
What follows from this for an investor
The third table is the reason this article is worth reading to the end. It covers the same ten-year period and the same eight countries, but instead of housing prices it shows rents. The figures are adjusted for inflation, that is, they show how much rents rose above the general price level.
| Rents 2015–2026 | Real change |
|---|---|
| Iceland | +36% |
| Lithuania | +21% |
| Estonia | +2% |
| Denmark | −3 % |
| Finland | −4 % |
| Sweden | −5 % |
| Norway | −8 % |
| Latvia | −14 % |
Finnish rents have withstood inflation as well as those in Denmark, Sweden and Norway. The tenants have not gone anywhere.
Something else happened in Finland: the price came loose from the rent.
When the price falls and the rent stays put, the rental yield improves. That is exactly what has happened: the ratio of housing prices to rents in Finland is 17 per cent lower than in 2015, which means about 21 per cent better rental yield relative to the acquisition price. In all seven other countries the ratio has risen, that is, the yield has weakened. Finland is the only one of the eight countries where the rental yield has improved over ten years.
Vertailun luvut ovat bruttoja: mittari on vuokran suhde hintaan ilman hoitokuluja, koska verrokkimaista ei ole vertailukelpoista hoitokulusarjaa. Suomessa asuinkerrostalojen ylläpitokustannukset ovat nousseet kymmenessä vuodessa noin 32 prosenttia eli selvästi vuokria nopeammin, joten hoitokulujen jälkeinen nettovuokra on kasvanut vain vähän. Tuoton paraneminen on tullut ostohinnasta, ei kassavirran kasvusta.
At the same time, replacing an existing home with a new one costs a quarter more than it did ten years ago. For a professional landlord the position is exceptional: income-producing stock can be bought clearly below the price at which it could be built. The return relative to the acquisition price is the best of the decade.
What this does not tell you
The figures are indices, not individual transactions: they describe direction and order of magnitude accurately, but the return on a single property is always settled by that property's own figures. The relationships are measured regularities, not proven causal links. The loan stock of housing companies also includes rental housing companies, so the whole sum is not shareholders' housing company loans.
One thing, however, has been measured precisely. It is also the most important point of this article: over ten years the return on a Finnish rental apartment relative to its price has improved. Among these eight countries that is unique.
Disclaimer
This article is market commentary. It is not investment advice or an investment recommendation, and it is not the marketing or sale of alternative investment funds within the meaning of the Act on Alternative Investment Fund Managers. The article is not an offer or an invitation to subscribe for, buy or sell any financial instrument.
The article is based on public statistical sources and on Samla Capital's own market monitoring. The information has been compiled carefully and the figures have been checked against their sources, but their accuracy is not guaranteed.
The views presented are the author's assessments at the time of writing and may change without separate notice. Past performance is no guarantee of future performance, and the assessments presented are not promises or guarantees. Investment activity always involves the risk of losing the capital invested. Investment decisions should be made on the basis of your own objectives and financial situation, using a specialist where necessary.