Housing prices in Helsinki are getting out of hand
High prices of dwellings make it less appealing for people to move to capital area for work
The runaway housing prices in Helsinki and Espoo have made it pointless for many people living elsewhere in Finland to dream about coming to work in the capital area.
For example the difference in the price per square metre of residential properties between Helsinki and the northern technology city of Oulu is already more than double.
Even in Espoo, the average price per square metre is nearly double that in the capital of Northern Finland.
Ari Laukkanen’s family is all too aware of the huge price difference.
In 2006 the Laukkanens moved to Oulu from the capital area. The money that they received from selling their semi-detached house bought the family a three-year-old 160-square-metre detached house in Oulu.
In the summer of 2010 the family sold the house in Oulu and moved back to Helsinki. They bought a plot and started building a detached house in Espoo’s Lintuvaara district.
“In Oulu house plots cost almost nothing and they can also be leased from the city. In Espoo the plot alone costs as much as a house elsewhere”, Ari Laukkanen explains.
An examination of the country’s regional housing prices by Pellervo Economic Research PTT sheds light on the situation in various cities.
“Oulu is a good example of how the prices are kept in check through a long-term land and plot policy”, commends PTT research director Markus Lahtinen.
In Oulu the ratio between housing prices and the disposable income of households has remained more or less the same since the mid-1990s.
However, in Helsinki in particular, the housing prices are constantly increasing faster than people’s earnings. The difference between Helsinki and other large cities is also growing at an accelerating rate.
The ever-increasing housing prices and rents complicate especially service industry workers’ movement after work to the capital area.
“They may be able to afford to move perhaps to Hämeenlinna or to Helsinki’s surrounding municipalities, from where they then commute to Helsinki, Espoo, and Vantaa”, reckons PTT managing director Pasi Holm.
As residences are expensive and cars are relatively cheap, this spells increasing traffic and traffic jams in the Helsinki area, Holm points out.
“A person without work may wonder if it is worth moving at all for work in the capital area if this means giving up a detached house elsewhere in Finland”, Holm considers.
According to PTT, a price crash is not in sight either.
The uncertainty caused by the eurozone debt crisis did cause the prices to come down slightly in the autumn, but they are only estimated to drop by a couple of per cent this year.
Rents, on the other hand, will go up by more than four per cent.
“If the uncertainty eases, housing prices may start increasing again because the interest rates will remain low", Lahtinen reckons.
Rental prices can be kept in check if the production of moderately-priced rental housing can be increased.
“In recent years far too few properties have been built for the rental market”, admits Minister of Housing and Communications Krista Kiuru (SDP).
The government has therefore decided to allocate borrowing powers worth EUR 1,025 million to finance state-supported rental housing production.
Next year it will be possible to commence the production of 3,500 regular rental dwellings and 1,000 right-of-occupancy dwellings, primarily in the Helsinki area.
“The deductible interest of the state loans has been halved, and this should tempt builders”, Kiuru believes.
Previously in HS International Edition:
Open data study finds variations in housing prices in prestigious neighbourhoods of Helsinki (14.10.2011)
Average income is not sufficient to permit living in Helsinki city centre (25.10.2011)
Old residences are rapidly increasing in price in Helsinki metropolitan area (4.5.2011)
Helsinki residents consider housing expensive and of poor standard (7.5.2010)