People aiming to sell their owner-occupied homes often leave them unsold if the market price is below the price they originally paid.
As a result, fewer people are moving and more are staying put in homes that aren't suitable for them.
That's according to a joint study by the Vatt Institute for Economic Research and the University of Helsinki.
It found that the likelihood of people selling their homes and moving drops sharply when anticipated capital gains from a sale would result in losses.
The study was conducted by Vatt research professor Teemu Lyytikäinen and doctoral researcher Risto Hurmeranta from the University of Helsinki.
To reach their findings, they examined households in the Helsinki, Tampere and Turku areas during 2006-2018.
According to the researchers, it seems to be psychologically important for many homeowners to at least recoup their original purchase price from the property they're selling.
"If say, five years ago you paid 200,000 euros for an apartment and you don't get at least the same price when you sell it, you'll often stay in your old apartment, even if you need to move," Lyytikäinen explained in a press release on Thursday.
Due to the decline in housing prices in recent years, many homeowners looking to sell may find themselves in a situation where selling at current market prices would require taking a loss on their investment.
The study found that homeowners trying to avoid such losses resulted in fewer housing sales among those wanting to move to another part of town, as well as those looking to move to another city.
Because of the decline in inter-urban migration, the study found that households were more likely to live in housing that is poorly suited to their situation.
