Operating environment

General operating environment

Slow improvements were being seen in the European economy during the review period. Growth in the US economy, a fall in the price of oil, and reflationary fiscal policies supported favourable developments in the world economy. The European Central Bank continued purchasing securities in the second quarter. The ECB expects that economic growth in Europe will pick up this year.

In Finland, economic development continued to be subdued. Positive phenomena included the strengthening of consumer confidence, the picking up of retail trade and the growth of exports. Nevertheless, recovery in industry was still weak. This was seen in, for example, demand for owner-occupied apartments and construction investments.

During the second quarter, the prices of old apartments in apartment blocks and row houses rose somewhat throughout the country. In the Helsinki Metropolitan Area, prices fell slightly where as in other parts of Finland they rose slightly. Compared to the corresponding period last year, prices fell throughout the country.

In the financial market, fluctuations could be witnessed towards the end of April. The euro strengthened against the US dollar and long-term interest rates rose after a long downward trend.

Industry operating environment

Demand for rental apartments remained at a good level. Business was good for small rental apartments and newly constructed locations, particularly in growth centres. There was still clear demand for new homes in the Helsinki Metropolitan Area.

New construction clearly focused on privately financed rental apartments. There were no noticeable changes in the price level of either new construction or renovations. The market situation for the construction of owner-occupied apartments enabled better-than-average implementation of negotiated contracts for rental housing development.

The slowness of the zoning process and a lack of suitable plots, particularly in the Helsinki Metropolitan Area, made it harder to launch the construction of new rental apartments.