Helsinki area residents spend more on housing than other Finns
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The Government Institute for Economic Research (VATT) reports that residents of the greater Helsinki region, and especially the city of Helsinki itself, spend a larger proportion of their incomes on housing than those who live in other parts of the country. In spite of this, households in Helsinki and its surroundings have more disposable income after housing expenses than families in other areas do.
In the survey of housing costs around Finland, researchers Teemu Lyytikäinen and Henrik Lönnqvist found that living in rental housing is ultimately more expensive than owning a house or apartment in almost all parts of Finland.
The study seems to confirm many previous assumptions on the relative costs of renting and owning a home.
In their calculations, the two researchers sought to find a formula that would give a better comparison of the expenses involved in renting and owning a home.
For instance, the instalments made in paying back a housing loan are seen as savings deposits, rather than housing costs. In a number of previous studies both amortisations and interest paid on the loans were seen as part of the cost of housing.
Included in the costs of renting were the rent itself, as well as payments for water, electricity, and services such as the use of a sauna. Social welfare benefits related to housing were deducted from the total. The same factors also affected the costs linked with home ownership. Lyytikäinen and Lönnqvist say that fluctuations in prices should also have been included in the calculations, but they lacked sufficient data from a longer period of time.
The study showed that in 1999 the value home ownership rose so much that the higher property value cancelled out all of the running costs of owning one's own home. Helsinki residents who own their homes got the greatest windfall profits because of the higher housing prices here than in other parts of Finland.
The researchers concede that rising prices benefit homeowners only when they sell the property, and even then, the advantage is questionable if the money needs to be used to buy another home in the same price bracket. Usually it is the heirs who are able to turn the higher costs of housing from a liability into an asset.
Lyytikäinen points out that the wealth that is tied up in a home influences consumer behaviour. When the value of a person's home goes up, putting money aside into savings is seen as less important, and the homeowners feel less inhibited about spending on consumer goods.
One factor increasing the real costs of living on rent is a taxation structure which favours home ownership.
Houses and apartments that are owned by the people who live in them also tend to be larger than rented dwellings, and are more likely to comprise detached houses, which brings down the costs when calculated per square metre.
Residents of the Helsinki region have higher incomes on average than other Finns, and therefore they have more money to spend on activities that are not directly related to housing.
Lyytikäinen and Lönnqvist conclude that the higher income level is a key reason why both rental and owned housing is more expensive in the Helsinki region than in other areas, but they do not blame the higher housing costs on shortages of land or insufficient housing construction.
Teemu Lyytikäinen emphasises that this conclusion was drawn by the researchers themselves, and not from the available data.
"It is natural that housing is more expensive in parts of the country where the potential to earn money is better than in other areas", they write. On the other hand, the distribution of income is uneven within the Helsinki region itself, and residents of the area with low incomes are squeezed quite hard by the high level of rents and prices.
Helsingin Sanomat
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| 28.2.2005 - TODAY |
 Helsinki area residents spend more on housing than other Finns
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