Record high price differentials between old and new apartments

Demand for expensive new flats starting to fade

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The price difference between old and new apartment housing in the Helsinki metropolitan area is reaching the point where the building of new projects on the fringes of the city is threatening to dry up altogether.
      The price gap between the old and new flats is particularly wide in Sipoo and Nurmijärvi, but also considerable in Vantaa, Kerava, and Järvenpää. In Sipoo the price of a 60 sq.m. apartment is EUR 60,000 higher than that of an old flat of equal size.
     
A major contributor to the high prices of new flats is the capital area's soaring cost of land. On top of everything, the available sites are often in poor condition.
      The cleaning, piling, and stabilising of the land before commencing the actual construction work all add to the price of the final building.
      The cost of land contributes 10 percent to the price per square metre of new apartments in the outskirts and up to 30 percent in central Helsinki.
      The energy-saving and sound proofing requirements, plus the planning requirements for suitable façade materials and car park facilities all add to the end price of new flats.
     
Managing director Risto Kyhälä of Huoneistokeskus real estate agency believes the prices of new housing cannot rise any further. The signs of demand dying down are already there.
      "Many residents of the capital area have had to give up plans of selling their old flat and moving into a new one because of the huge price differential", Kyhälä says.
     
Director Olavi Louko from the City of Espoo Technical and Environmental Services believes that the way out of the dead end situation is the zoning and developing of vast and coherent residential areas.
      "The increase of supply will keep prices under control."
      The Head of the Helsinki City Planning Department, Tuomas Rajajärvi says a regional plan for use of land would solve the problem over lack of suitable sites.
      "It cannot be possible that the Helsinki metropolitan area only grows towards the west and north but not to the east."


Links:
  City of Espoo Technical and Environmental Services
  Helsinki City Planning Department

Helsingin Sanomat