Challenges in operational environment continue The operational environment for the housing market and construction remained challenging in 2024. Residential construction declined to a low level, although a large supply of previously completed dwellings remained on the market. General economic uncertainty and low consumer confidence posed challenges to the sector, even though inflation slowed during the year and interest rates began to decline gradually. The housing market has not recovered significantly from its lowest point, and transaction volumes remain well below normal levels.
The housing policy directions in the government programme and the phasing out of key intermediate tenure housing models present challenges to the city’s current housing policy and have implications for housing conditions in Helsinki, the feasibility of housing production, and the spatial segregation of residential areas. The long-term development of the overall building cost index reflects both general economic cycles and specific cost drivers in the construction industry. While the long-term trend of the overall index has been mostly moderate, recent years have seen exceptional increases, especially in the prices of construction materials.
According to Statistics Finland, construction costs remained unchanged in 2024 compared to the previous year. Consumer price inflation also slowed in 2024, influenced by the deceleration of inflation and the gradual decline in interest rates. The economic downturn and weak outlook continue to affect both real estate sales and the decline in housing prices (see Figure 1). The outlook for the housing market and construction over the coming years is cautiously optimistic. Additional housing will continue to be needed in the years ahead as the population continues to grow rapidly. According to forecasts, construction activity is expected to recover slowly this year and next.
In the real estate market, investor demand is anticipated to return first in the rental housing sector. The main drivers of more positive prospects include falling interest rates, recovering purchasing power and consumer confidence, and population growth, all of which create conditions for a recovery in housing demand. Interest rate development play a critical role: if the European Central Bank (ECB) continues to lower key interest rates, this will support loan accessibility and thus act as a driver of increased housing demand.
On the other hand, the high supply of new dwellings, combined with uncertain economic prospects, is holding back the market and weakening investment outlooks in the sector (e.g. Ministry of finance 2025, PTT 2025, KTI 2025). Asuntomarkkinoiden ja rakentamisen vuosijulkaisu 2024 7