The fourteen largest urban areas need more than 760000 new apartments by 2040. It is almost the same amount as has been built in the entire country in the last 25 years. In the rest of Finland, the need to build new apartments remains low due to weak population growth. This is evident from the recent Housing Needs 2040 study by the Technology Center VTT.
VTT has found out how much housing will be built in Finland in the future and where. In the future, the total annual need will be an average of 30 new apartments, which is slightly more than the estimated need and realized production in recent years. According to VTT's specialist researcher Terttu Vainio, the most significant difference compared to the past is the increasingly strong concentration of housing demand in the largest urban areas.
The fourteen largest urban regions' share of housing production has already risen to almost 90 percent of all completed new housing. It will grow even more if urbanization continues along the same development path as it has now.
The starting point of the study is the population forecast published by Statistics Finland in the fall of 2015. In the assessment of the need for housing production, the population has been placed in different areas either in accordance with the regional forecast or assuming that the population will concentrate in the largest urban areas at the same rate as happened in 2010–2014. In both options, the share of large urban areas in both the population and new apartments increases, and the rest of mainland Finland loses its inhabitants.
"In the urbanization model, the total need for housing is clearly greater, because the large population increase of growing urban areas requires them to also strongly increase their housing supply. In this case, an even larger part of the current apartments are located, as it were, in the wrong places. In the declining development model, the existing housing stock, on the other hand, better meets the need. New production would require an average of 25 apartments annually in the period up to 000", specialist researcher Terttu Vainio clarify.
Immigration can accelerate development
In the population forecast, it is estimated that net immigration will remain at the level of recent years. It has not taken into account the increase in the number of asylum seekers that started last fall. The acceleration of immigration may raise the total need for new apartments to more than 800 apartments.
Part of the housing need created by immigration can be met by taking vacant apartments into use. However, the pressure is primarily directed at growth centers, where the majority of immigrants will soon find themselves.
Research is a tool for preparing for development
The chief economist who chaired the research steering group Sami Pakarinen The construction industry from RT emphasizes that there is a considerable social challenge ahead. For example, Helsinki region needs 50 percent, Tampere region 40 percent and Oulu region as much as 54 percent more apartments compared to their current housing stock. This must be taken into account, for example, in zoning and investments in public transport, so that the housing shortage does not become a bottleneck for the entire economic growth.
"A change in the regional structure is also an opportunity, because it sustains new construction. Meeting the need for housing is a total of nearly 200 billion euros in the next 25 years. In terms of the amount of work, it means the same as if all employed people in Finland were employed for more than a year", Sami Pakarinen calculates.
"Although residential construction is concentrated in the largest urban areas, it is maintained to some extent by changes in people's housing needs, when, for example, there is a demand for small accessible apartments due to the aging of the population. However, financing can become a problem in migration loss areas due to banks' stricter risk management and collateral requirements. Repair construction is distributed more evenly in different areas," says Sami Pakarinen.
Background information about the study
VTT's Housing Production Demand 2040 study was commissioned by the Ministry of the Environment, Rakennusteollisuus RT, Planning and consulting companies SKOL, Finnish Union of Trade Unions Central Organization SAK, Municipal Finance and Suomen Mortgage Association.
The research has used a calculation model that takes into account the factors affecting housing demand, i.e. population development, internal migration and changes in family size, as well as the housing supply, which includes the existing building stock, reservation, i.e. empty apartments, departures and placement of apartments in relation to demand.
In the study, a region-specific review has been carried out for the fourteen largest urban regions. These include the metropolitan area of Helsinki, the regions of Tampere, Turku and Oulu, as well as ten medium-sized urban regions with a population of approximately 100 inhabitants or more.
The research is intended as a tool for forecasting housing construction and for the state and municipalities to develop the community structure.
VTT made the previous forecast of the need for housing production in 2011, when it was based on the 2009 population forecast.
Materials:
The housing production demand 2040 research report can be found on VTT's website
http://www.vtt.fi/inf/pdf/technology/2016/T247.pdf
The research report, summary, presentation materials and video recording of the media event are available on the page www.rakennusteollisuus.fi/asuntotuotanto2040
For more information:
Terttu Vainio, specialist researcher, VTT, tel. 040 508 0983
Sami Pakarinen, chief economist, Construction Industry RT, tel. 050 343 4337
Merja Vuoripuro, Director of Communications, Construction Industry RT, tel. 040 587 2642