(Bloomberg) -- Finnish house prices will probably bounce back to meager growth next year after bottoming out this quarter as an easing outlook for borrowing costs will boost demand for homes in the Nordic country, Nordea Bank Abp said. 

After an “exceptionally quick” price drop that followed the rise in interest rates, Euribor rates — the most commonly used benchmark in Finnish mortgages — are probably around their peak now, Nordea economist Juho Kostiainen wrote in a note on Wednesday. He sees the first year-on-year increase in house prices in the second quarter of next year, three quarters after borrowing costs have peaked. 

In 2024, the largest Nordic lender expects house prices to rise approximately 1% across Finland, following a decline of 6% this year in the whole country and 8% in the greater Helsinki region. In addition to an easing burden from declining loan costs, the simultaneous slowdown in construction and faster population gains in growth areas will balance supply and demand in the market, it said.

While home prices in Finland trailed the steep pandemic-era gains of its Nordic peers, they are now back at the pre-Covid level, according to Nordea’s data, not adjusted for seasonality. That compares with Sweden and Denmark at about 10% above that level and Norway’s home prices exceeding pre-pandemic valuations by more than 15%.

Sales of old apartments are still about 30% below the long-term average with new apartment sale volumes down by more than 75%, compared to “normal times,” Nordea said. Its view is more optimistic than that of local rival OP Group, which predicted in September that the market is yet to bottom out and prices will not start to rise until 2025. 

Read More: Finland’s Housing Prices Still Have Room to Drop, OP Forecasts

Nordea’s moderate growth forecast is based on the expectation that the European Central Bank cuts interest rates “as expected, in which case the policy rate would be around 3% by the end of next year,” Kostiainen wrote.  

Read More: Finnish Housing Starts Face a Plunge to 1940s Levels, Lobby Says

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