Finnish Housing Prices and Rents Decline Simultaneously

Housing prices and rents in Finland are declining simultaneously. This marks a rare period where both asset values and rental costs are under downward pressure. The trend is driven by a mismatch between housing supply and the formation of new households. Fewer young people are leaving their parents' homes to start independent living. This shift reduces the core demand that typically supports the rental and purchase markets.

Economist Juhana Brotherus links this development to slow growth in household numbers. The supply of dwellings has outpaced the creation of new households. This imbalance has created excess inventory in the market. As a result, landlords and sellers must lower their asking prices to attract tenants and buyers. The phenomenon is not isolated to specific cities but affects the national housing sector broadly.

Young Households Shrink by 8,000

The number of households among young people decreased by more than 8,000 in 2025. In previous years, the figure changed by a similar amount but increased. Brotherus predicts 2026 could become the third consecutive year of decline. Changes in student support and housing assistance systems reduced payments for students. This made living separately relatively more expensive for young adults.

Weak economic conditions and employment problems further deter young people from moving out. Many choose to remain with their parents longer. Others move in with a partner or share rental housing with friends. These behaviors reduce the number of independent tenants entering the market. The financial incentives for independent living have weakened significantly in recent years.

Construction Outpaces New Demand

Smaller younger generations are entering the housing market. This directly reduces the pool of new buyers and tenants. Immigrants may also be living more densely than before. Some arriving residents move in with partners rather than establishing new households. Consequently, population growth does not always translate into new housing demand.

Housing construction declined sharply after high rates at the turn of the 2020s. More than 20,000 new dwellings were completed in Finland in 2024. However, even fewer new households were formed during that period. The supply of housing grew faster than the demand for it. This surplus puts direct pressure on market prices and rental rates.

Long-Term Demographic Pressures Persist

Calculations by consulting company MDI project household growth in large cities. The number of households is expected to increase by 220,000 by 2050. This translates to a need for fewer than 10,000 new dwellings per year. This long-term outlook reflects structural demographic shifts in Finland. Population ageing and lower birth rates are key factors in this projection.

Smaller generations born after 2010 will further constrain future demand. The market will continue to face structural headwinds. The simultaneous fall in prices and rents signals a lasting adjustment. Data from GN auto markets/housing: housing prices confirms the broad nature of this decline. The housing sector is entering a phase of lower growth and reduced value appreciation.