Property market in scandanavia showing signs of recovery
The property market in Scandanavia is beginning to bottom out although real estate prices in some Nordic countries will continue falling, it is claimed.
Prices in Norway and Denmark have begun to stabilize, although the bottom has not yet been reached in Sweden, Finland and the Baltic countries, according to analysts.
The rental market throughout the region has weakened significantly in the past year, but the trend varies to some extent between the countries, with Helsinki and Copenhagen generally showing smaller rent reductions than the other capital cities.
Norway is leading the recovery and in Denmark a stable trend in rents in the capital city Copenhagen for good-quality properties in good locations means that prices are not expected to sink much further.
‘We are now seeing signs that the bottom of the market is approaching, since a number of players are starting to come in and buy.
Transaction volumes have started to increase and prices are beginning to show signs of stabilising,’ said Marie Bucht, Head of Advice at Newsec.
In Sweden and Finland, falling rent levels mean that prices are continuing downwards in spite of the low interest rates, although at a slower pace than before, she added.
In the Baltic countries prices have fallen dramatically in the past year.
However, prices are expected to stabilize in coming years, although this is more to do with generally lower interest rates than an upturn in the market.
‘In the current situation, property market price levels are attractive in both the Nordic and Baltic regions.
Gradual improvements on the credit market combined with the business opportunities that now exist mean that the downward trend in transaction volumes could soon be halted especially for good-quality properties in good locations,’ explained Bucht.
‘In market situations like this, too, no investor wants to be the last to re-enter the market, which suggests that the trend may move upwards rapidly once the transaction market really turns,’ added Bucht.
In Oslo rents are expected to stabilize towards the end of 2009, while in Stockholm it is thought that the largest fall in rents has already occurred, although further small declines are expected in the last few months of 2009 and into 2010.
However, the sheer depth of the decline in transactions leaves a steep climb ahead. In the first half of 2009 transaction volume on the Nordic and Baltic property markets declined 80% to a record low.
Transaction volumes in Sweden and Denmark fell by a similar amount and in Finland and Norway they fell by 75% and 60% respectively. In addition foreign investors have reduced their activity in the region.
Sales of residential real estate in Finland have now started to pick up again, according to figures from Statistics Finland, a government agency.
Prices rose in the second quarter of 2009 by 2.3% in Helsinki and 5.8% overall from the first quarter of the year.
That leaves current housing prices only 3.3% lower than they were at their peak.