The value of many residential properties in the city of Lahti are stagnant or dwindling and the situation has signalled to homeowners that their investments will not pay off like they have in the past.
About an hour's drive from Helsinki, the municipality of nearly 120,000 residents has the potential to become an affordable residential alternative to the continually-inflating housing prices found in the capital region.
However, such a migration has not taken shape and Lahti's housing prices have been exceptionally moderate in recent years.
The value of houses and apartments located in the remote areas and small towns of Finland have been falling for some time in general, according to Raija Paananen-Laine, the director of regional bank OP Päijät-Häme.
"It was once thought that owning your own home is sensible and a good investment. It's quite a big leap to consider that [now] you may not get back what you paid for from your beloved home," she said.
"If you bought a flat five or ten years ago, it was not at all clear that its value would rise, nor even be able to get the price you paid for it," Paananen-Laine explained.
She added that the situation doesn't seem like it will change anytime soon.
"I don't think there will be a major increase in the [housing] prices of Päijät-Häme," she said.
Demand for family homes stable
Despite the sluggish market, as well as the effects of the pandemic, Lahti's real estate business has been fairly comfortable, according to Paananen-Laine, adding that there are even shortages of certain types of housing at the moment.
"Detached houses valued at about 200,000 euros are in highest demand," he said.
Hannu Väänänen, a local real estate agent at Kiinteistömaailma, concurred.
"There's a demand now for well-maintained family homes in good locations. Newer and well-maintained older detached houses are also selling well," Väänänen said.
However, he noted that studio flats and small one-bedroom apartments are more difficult to sell as there was a glut of such housing construction a few years ago.
The executive director of Päijät-Häme's region Real Estate Federation office, Hanna Koskela, said that the large number of small homes can also be seen in the portfolios of housing investors.
"In the sense that there appears to be an oversupply of small apartments, rent prices are not rising at the same pace as in other growth centres, and not in proportion to the costs [involved]," Koskela explained.
Prospective homeowners who want to sell off flats in bad condition are facing the most difficult situation at the moment, according to OP Bank's Paananen-Laine.
"Old and poorly-maintained properties in remote locations aren't finding buyers," she said.
The real estate association's Koskela said that homeowners and housing cooperatives that maintain apartment buildings should keep up with repairs and renovations, as the failure to do so can potentially reduce property values.
Shiny and new
While the market prices of most older homes in the region stagnate, new residential housing with considerably higher price tags are being built in Lahti.
For example, housing projects that will be able to accommodate around 6,000 residents near the city's centre have received zoning approval. Construction of that effort's first apartment block was completed in June, but most of the flats remain unsold.
On the other hand, all of the apartments in the recently-built Ranta-Kartano area have already been purchased.
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"The pace of construction is brisk near the city centre and new homes are appearing all the time," Koskela explained, adding that the demand for housing closer to the city may be undercut by the lower prices of old detached houses.
According to real estate agent Väänänen, Lahti's market is in dire need of new residents from outside the region.
OP Bank's Paananen-Laine agreed.
"Yes, the Lahti region has been anticipating an influx of new residents from the Helsinki area for a long time. It remains to be seen how the coronavirus situation, for example, will affect migration [in the future]," Paananen-Laine said.
Lahti has made efforts to become more environmentally friendly and the city recently received the European Commission’s Green Capital Award.
