Low interest rates reflected in house prices

Abstract

House prices have in the past 10 years risen in the Helsinki Metropolitan Area faster than in the other large Finnish cities. The widening price gap may reflect the increasing attractiveness of the Helsinki Metropolitan Area relative to the other major cities. At the same time, the decline in housing loan interest rates has reduced the user cost of owner-occupied housing. This may also explain why house prices have risen in areas where the supply of housing has not grown correspondingly.