The impact of rising interest rates on the housing prices in Finland (2022-2024) : Evidence from major urban cities
Kodagodage, Dinuka Darshana (2025)
2025
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2025122138795
https://urn.fi/URN:NBN:fi:amk-2025122138795
Tiivistelmä
This thesis examines the impact of rising interest rates on housing prices in Finland from 2022 to 2024, with a particular focus on major urban cities. The study investigates how monetary policy changes by the European Central Bank (ECB) influenced mortgage rates, housing demand, and affordability. Given that most mortgage loans in Finland are tied to the Euribor rate, fluctuations in this benchmark significantly affect homebuyers and real estate market trends.
The research stands on a mixed-method approach, incorporating quantitative data analysis of housing prices, mortgage rates, GDP trends, inflation, and disposable income. Additionally, theoretical models such as the Supply and Demand Theory, the User-Cost Model, and the Speculative Bubble Theory provide a framework for understanding the
mechanisms driving housing price fluctuations. Empirical studies on Finnish housing markets further validate these findings. Results indicate that rising interest rates led to a decrease in housing demand, an increase in mortgage costs, and a slowdown in property price growth. Inflation and increased construction costs further compounded affordability issues. The study highlights the significant role of macroeconomic factors in shaping housing prices and provides insights for policymakers, investors, and prospective homeowners navigating the Finnish housing market.
The research stands on a mixed-method approach, incorporating quantitative data analysis of housing prices, mortgage rates, GDP trends, inflation, and disposable income. Additionally, theoretical models such as the Supply and Demand Theory, the User-Cost Model, and the Speculative Bubble Theory provide a framework for understanding the
mechanisms driving housing price fluctuations. Empirical studies on Finnish housing markets further validate these findings. Results indicate that rising interest rates led to a decrease in housing demand, an increase in mortgage costs, and a slowdown in property price growth. Inflation and increased construction costs further compounded affordability issues. The study highlights the significant role of macroeconomic factors in shaping housing prices and provides insights for policymakers, investors, and prospective homeowners navigating the Finnish housing market.