Cost of housing takes a big bite out of people’s wallets in Southern Finland
A Helsinki family with children pays EUR 1,000 per month more for an owner-occupied home than does a similar family in Oulu
Helsinki may no longer be quite so expensive for ex-pats (see other story from today), but iIn terms of housing costs, the gap between the Helsinki metropolitan area and the rest of the country is growing further, forecasts Pellervo Economic Research PTT.
A family with children living in a block of flats in Helsinki and Espoo pays for their owner-occupied flat already more than twice as much as they would pay in Pori, Kouvola, and Oulu. The difference amounts to approximately EUR 1,000 per month.
When it comes to terraced houses, the gap is about EUR 800 and in a detached house around EUR 900 per month.
For a rented home, a Helsinki family pays an average of EUR 400 more than do families living in Kouvola and Pori, where rents are lower. The big differences are attributable to the elevated prices of plots of land in the capital area.
”The price of land is included in the prices of homes. Because the municipalities do not zone enough land for residential use, the prices of plots continue to rise”, stresses Harri Hiltunen, managing director of the Finnish Real Estate Federation.
In Hiltunen’s view, the problem could be alleviated by a joint land use plan for the entire metropolitan area.
According to PTT managing director Pasi Holm, the high prices will chase families with children out of the capital region to exurbs from where the parents commute to work in the Helsinki metropolitan area.
The high housing costs are also hard on low- and medium-income singles.
A single person, earning slightly more than EUR 3,120 per month and living in a rented home, already spends a third of his or her net income on accommodation.
If the person has got his or her hands on an owner-occupied flat, the share of housing costs of their net income can be up to 37 per cent.
PTT forecasts an increase of about 10 per cent in housing costs over the period from 2012 to 2016. Rents are expected to rise most.
The government is planning many changes that would make it slower to transfer to owner-occupied homes particularly in the capital region. It means that an increasing number of people would have to live in a rented home for longer.
On the other hand, the changes could curb price rises to some extent.
An upper limit on the amount of money that banks can lend in proportion to the price of a home is under preparation. This was also one of the three pieces of advice offered to Finland by the International Monetary Fund (IMF) on Monday to prevent excessive indebtedness and to strengthen the banks.
Further measures to be taken include cutting mortgage interest tax deductions and increasing the transfer tax payable on sales of homes, and maybe extending it to apply to the entire debt-free price of homes. In addition, even interest rates are predicted to rise clearly higher than today by 2016.
These measures are bound to increase the demand for rented homes and to raise rents. If no new rental units are built, it could create a severe disturbance for the housing market, predict experts from PTT and the Finnish Real Estate Federation.
Previously in HS International Edition:
IMF urges Finland to prepare better for bad times (12.6.2012)
Transfer tax increase will raise the cost of buying property (8.6.2012)
Housing prices in Helsinki are getting out of hand (5.1.2012)
Average income is not sufficient to permit living in Helsinki city centre (25.10.2011)
Helsinki residents consider housing expensive and of poor standard (7.5.2010)
The Finnish Real Estate Federation
Pellervo Economic Research PTT