Few buyers for new apartments
Builders postponing decisions to start construction
By Vappu Kaarenoja and Pauliina Pulkkinen
People sitting on the balconies of a wooden row house enjoy the sun. One of the residents has placed a table and chairs with a parasol on the back yard – an ideal place to eat on such a fine day.
Living is easy at the development built by the YIT construction company in Kauklanti in Espoo – at least in the picture on the front cover of the brochure.
Nobody is actually living there yet. Of the 21 units which will be ready by Christmas, 14 remain unsold.
YIT sales agent Mari Kettunen, who is there to show the building to prospective buyers, looks anxiously to the street. Her hour-long showing started 15 minutes earlier, but no potential buyers are to be seen.
The downward trend in the economy is already making itself felt in sales of new housing. The large construction companies SRV, Skanska, and YIT admit that sales of their new units have been slow.
“A couple of projects have not sold as well as we would have liked. People are taking more time to make decisions than before”, says Skanska customer manager Markku Koivu.
A rule of thumb for the construction companies has been that at least 40 per cent of the units of a building that is going up need to be reserved before construction begins. Now it seems that it is taking more time to reach this goal.
“Bookings are not being made like they used to be. In some way the slump is apparent”, says Antero Nuutinen, director of housing construction at SRV.
“Some kind of slowdown is visible. People are cautious and are following the situation”, says Tero Kiviniemi YIT’s director of construction services.
Timo Mesola, CEO of the real estate agency Vuokraturva, says that business is moderately good with small dwellings in the most desirable areas. These are generally old, which is one reason why apartments in old buildings are selling somewhat more easily than in newer ones.
Earlier in the year and in the spring all of the construction companies are completing work on large buildings which have not been doing very well in advance sales.
For instance, only a few apartments have been sold in two large apartment houses being built by SRV in Martinlaakso in Vantaa. SRV has resorted to exceptionally intense marketing efforts, including television advertising.
As for YIT, its headaches in the Helsinki region are in Espoo. One of these is Penninki, the wooden row house in Kauklahti mentioned at the beginning of the article.
A white car enters the parking area. Could this be a potential buyer? Stepping out of the car are Päivi and Tomi Petäjäniemi with their son Perttu. The family from Espoo are interested in upgrading to a larger home. They take a brochure from Mari Kettunen and start looking around.
The large open kitchen upstairs is pleasing, but a disappointment awaits downstairs: “There’s hardly any yard at all”, Tomi Petäjäniemi says on the porch. Wife Päivi notices that there is a direct view of the back yard from the balcony of the apartment next door.
The Petäjäniemis say that they are well aware that sales of new apartments have not been going very well. They feel that this means that now is a good time to go for something bigger. “Our apartment is smaller than this one, and prices of small apartments have not fallen as much, in relative terms”, Tomi Petäjäniemi says.
The aim of builders is that no more than about ten per cent of the apartments would be unsold when a building is completed. Reaching this goal might be difficult with the Penninki building. At least ten of the units should be sold by Christmas.
Mari Koppinen takes down the signs in the yard. The Petäjäniemis are moving on. They are not interested in getting an apartment there because of the small yard, as well as some other factors.
Construction companies are thinking long and hard about when to start construction on new housing. If many dwellings in old buildings remain unsold and if the overall economic situation appears to be weakening, new construction will be postponed.
Helsingin Sanomat / First published in print 28.11.2011
Previously in HS International Edition:
Open data study finds variations in housing prices in prestigious neighbourhoods of Helsinki (14.10.2011)
VAPPU KAARENOJA AND PAULIINA PULKKINEN / Helsingin Sanomat