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Juhana Brotherus Wikipedia, Wiki, Twitter – According to Juhana Brotherus, chief economist at the Federation of Finnish Enterprises, the price development of new residential units has been less than official figures indicate because of deficiencies in the statistical monitoring of pricing.
Brotherus thinks that the prices of new homes in housing businesses fell considerably more dramatically in the first quarter of the year than the official figures’ projected 2% decline.
Sharper decline in new home prices than statistics indicate, economist tells HS
Statistics Finland has released data showing that between January and March, the prices of older homes owned by housing firms fell by 5.5% annually. Additionally, according to the report, sales of newly constructed homes fell by more than 70% from the same period in 2022.
Brotherus, who was once the head economist of the Mortgage Society of Finland (Hypo), is dubious about the reported decline in the price of new homes, in part because prices have dropped significantly for homes that are in high demand among investors and are situated in more costly neighbourhoods.
“New units are more expensive than the rest of the housing supply, and investors prefer them. If the price development of new units was more constant than that of older units, I’d be extremely astonished,” he told the publication. His suspicions are further supported by the varied types of data that were used to create the pricing statistics for both old and new homes.
The Tax Administration receives information and transfers tax records, so the underlying data for price statistics for older homes consists nearly entirely of sales. In contrast, statistics for newly constructed homes are insufficient because they are reliant on information provided to the Federation of Real Estate Agency’s (KVKL) price monitoring service by real estate agencies and construction firms.
“Statistical monitoring for new houses is of significantly lower quality than the really high-quality, transfer tax report-based monitoring for old houses,” Brotherus told Helsingin Sanomat.
The quality issues arise because, unlike older homes, new homes are often sold directly by construction companies. However, as the housing market slows, they are increasingly turning to real estate brokers for assistance.
Brotherus believed that since agencies and consumers use the data to assess the market prices of foreclosed homes, building businesses have an “obvious interest” to report high house prices but not low prices. It’s no secret, he continued, that new home price statistics aren’t always of the highest calibre.
Additionally, construction firms seek to boost sales by offering a variety of financial incentives that aren’t always represented in the official price data.
If the sale is completed by the end of July, units constructed by Vantaa-based Cubesta for the Loviisa Housing Fair, for instance, come with two years of free usage of a Tesla 3, with a yearly mileage cap of 15,000 kilometres.
Ilkka Rainio, the managing director of Cubesta, provided the Helsingin Sanomat with an explanation of the rationale behind the campaign on Saturday, June 3. “Honestly, I have to say that house sales are rather slow,” he said.
Brotherus emphasised on Wednesday that the core of these offers are price reductions. Price reductions are frequently disguised as reductions in maintenance costs or promises to pay for remodelling. Technically, he claimed, they are price reductions.