Although forest property prices have risen sharply in recent years, sellers continue to assess buyers’ purchasing power conservatively.
Statistics from the National Land Survey of Finland and Suomen Sijoitusmetsät Oy reveal that forest properties nationwide have sold for an average of 23 per cent above the asking price. The findings are based on 1,080 forest property transactions with asking prices in mainland Finland over a 12-month period from November 2021 to October 2022.
The highest premiums above asking price were paid in Southern Finland, averaging 35 per cent. In Lapland, the price premium was lowest, averaging 9 per cent.
Gap between asking price and final sale price has widened sharply
The difference between asking prices and realised sale prices has widened considerably over six years, as in 2016 forest properties sold for only four per cent above the asking price.
“The steadily growing gap between the asking price and the actual transaction prices indicates that the forest property sellers’ and brokers’ view of the market price level is lagging behind reality. On the other hand, it may be that brokers estimate the asking price conservatively so that they can more likely present the seller with offers higher than the asking price,” says Suomen Sijoitusmetsät’s Head of Forest Information Eero Viitanen.
Few sales completed at asking price
With accelerating demand for forest properties, fewer and fewer forest properties are changing hands at or below the asking price.
“Across the whole country, only 13 per cent of transactions in the last 12 months were made at or below the asking price. In Southern Finland, this occurred in only three per cent of transactions. In Lapland, asking prices are higher relative to the market price. There, 39 per cent of transactions were made at or below the asking price,” Viitanen says.
Although the final sale price is determined case by case based on offers made for the property, setting the asking price matters to the seller.
It is advantageous for the seller to set the asking price high rather than low.
“When analysing transaction prices and asking prices, it consistently emerges that the higher the asking price is relative to the market price level, the higher the expected transaction price will be.”
There is another side to the coin, Viitanen notes.
“On the other hand, an asking price set too high can deter potential buyers. Therefore, knowing the actual market price level is of paramount importance.”
INFO: Asking price models in all forest property sales 11/2021–10/2022 (total 1,179 sales, including sales where the seller did not present an asking price):
- Seller presents an asking price, above or below which the buyer may offer (71.1% of completed sales)
- Tender sale where the seller presents a starting price below which offers cannot be made (19.7%)
- Auction, where an asking price is often not presented (3.9%)
- Tender sale without an asking price (5.3%)
The data concerns properties over 10 hectares, which are highly representative of the forest property market. For example, sales between relatives are not included in these figures.
The difference between realised sale prices and asking prices has widened considerably since 2016. At that time, forest properties sold nationwide for an average of four per cent above the asking price; now nearly 23 per cent.
Map regions
- Southern Finland: The regions of Southwest Finland, Uusimaa, Kanta-Häme and Päijät-Häme, Kymenlaakso, South Karelia, and Satakunta in their entirety, as well as the southern parts of the Pirkanmaa and South Savo regions.
- Central Finland: The regions of Ostrobothnia, South and Central Ostrobothnia, Central Finland, North Savo, and North Karelia in their entirety, as well as the northern parts of the Pirkanmaa and South Savo regions.
- Northern Finland: The regions of North Ostrobothnia and Kainuu.
- Lapland: The region of Lapland.
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