According to Eastern Finland's economic barometer, industry and municipalities are comfortable with construction projects in North Karelia.
The outlook for new construction in North Karelia and especially in Joensuu has stabilized since the beginning of the year to correspond to the longer-term normal situation after years of strong growth. Fierce housing construction has calmed down after the completion of student housing production. However, the prospects for housing construction in the near term and next year were not characterized as weak in the economic barometer of the Eastern Finland district of the Building Industry and at its press conference in Joensuu on April 24. The outlook has also brightened a bit as spring progresses.
Chairman of the board of Rakennusliike Soimu Oy Eero Mustonen said that the demand for small apartments in particular is still reasonably brisk.
- Homebuyers' and investors' courage and confidence in the economic development is recovering towards the summer, which invigorates the housing market and new construction projects. Construction investments by industry and municipalities also seem to be quite active in Joensuu and neighboring municipalities.
- I believe that the cyclical situation will normalize in the construction of the next decade. Housing production will stabilize in Joensuu at an annual level of 500-600. The balance between demand and supply is good considering the availability of domestic labor, subcontractors and construction materials. However, price competition and cost pressures remain tight, stated Eero Mustonen.
CEO of Rakennustoimisto Eero Reijonen Oy Jarmo Hämäläinen is much along the same lines, emphasizing the increase in industry, trade and public administration construction contracts in various parts of North Karelia, especially in the greater Joensuu area.
- For example, numerous school, kindergarten and factory expansion projects are underway and about to start. In housing construction, there may be a slight breather this year and next, but not a worrisome slowdown. In the next decade, housing construction can turn to growth if or when housing production starts in the areas of the railway yard and the vocational training municipality association, envisions Hämäläinen.
He also considers the production factor situation in construction, i.e. the availability of labor and construction materials and subcontractors, to be quite good and balanced compared to previous years. However, the competitive situation continues to be fierce and the profitability pressures have not eased.
Favorable times for overhaul
CEO of Savonlinna construction company Kaskinen Invest Oy Terho Kaskinen hopes that housing associations and municipalities will increase their renovation contracts, because the price level is now reasonable and there are enough builders. There has been a lot of demand over the years. The same applies to all Eastern Finnish cities and municipalities.
- Renovations will probably increase towards the summer. The development partly depends on bank financing, which has tightened especially for destinations outside the city centers. Senate properties is active in the maintenance and renovation of the state's real estate assets. Industry also invests in repair and renewal projects in Itä-Savo. Thanks to them, new jobs are created, which gives a ray of light to our region. The new production of apartments is slow in the Savonlinna region and elsewhere in Itä Savo due to migration losses. Only in the center of Savonlinna is the housing market functioning moderately, says Terho Kaskinen.
Building industry Eastern Finland district manager Kimmo Anttonen sees the cyclical picture of house construction in Eastern Finland as dichotomous. In his opinion, activities other than housing construction will continue to be strong, and in some cases even growing this year.
- Investments in cities are still high, for example in renewing the school network and daycare centers. Repair construction is steady and new construction investments are being made in health care and services for the elderly. Design offices have full order books and almost all builders have full employment. Thus, one cannot speak of a recession, let alone a collapse. Housing construction is normalizing, but its cyclical sensitivity is increasing.
Kimmo Anttonen estimates that Joensuu in particular will face a leveling off of housing construction and sales this year, when the peak demand for rental housing caused by the relocation of the teacher training institution subsides and new construction is completed.
- This means returning to the normal production level that preceded the peak of recent years. Adapting to it means negative figures for a while in Joensuu. However, there are enough people and communities buying apartments so that the owner-occupied housing market will continue at a steady level, with interest rates remaining close to zero for at least the next couple of years. However, there is now a clearer buyer's market than before, when the price level remains stable and there is enough supply, says Anttonen.
According to him, Joensuu's positive construction prospects are supported by market-based zoning, i.e. adapting the size of apartments to suit the market.
- The housing investment market is dichotomous, just like the economic outlook. Banks no longer invest loans with debt money, because they are wary of a declining housing and economic cycle. Thus, investors who, in addition to a housing association loan, finance the purchase of an investment apartment with debt have left the market. Investors with their own capital still operate in the housing market, but they choose their targets even more carefully, reminds Anttonen.
See also:
Economic data of Eastern Finland
Kimmo Anttonen Regional Manager for Eastern Finland