In growing urban areas, more new apartments will be needed each year in the next two decades than were built in the previous two decades. The housing production in large cities should be kept as even as possible, regardless of what kind of collapse the corona pandemic causes the economy, according to the Housing Needs 2020–2040 study by the Technology Research Center VTT.
VTT updated the housing production demand calculations on behalf of Rakennusteollisuus RT, the Ministry of the Environment, the Confederation of Finnish Trade Unions SAK, Municipal Finance and the Finnish Mortgage Association. At the beginning of 2016, a previous similar forecast was made, which fell short of the realized need.
Finland's population is no longer growing much, and in the regional population forecast of Statistics Finland, it is estimated to decline in the early 2030s. The increase in the need for housing production is due to the natural population growth of cities, immigration, the prevalence of single-adult households and the early independence of young people. Over the past twenty years, the shrinking of family size has had a greater impact on the need for housing production than migration.
- The major structural change in housing in recent decades has been the increase in the number of single-person households and single-adult households. This trend will probably become even stronger in the coming decades, which will increase the need for housing, says the VTT specialist researcher responsible for the study Terttu Vainio.
Annual need for 30–000 new apartments
In a recent study, two scenarios have been drawn up for the need for housing production, which differ from each other precisely with regard to the development of the size of households. In the trend forecast, the family structure remains at the current level, and in the shrinking households scenario, living alone becomes even more common.
The study estimates the annual need for additional construction in mainland Finland to be at least 30 apartments. However, if young adults leave their childhood homes earlier and the number of single-adult households continues to grow, 000 apartments will have to be built annually. In the past couple of decades, the average amount of housing production has been around 35 apartments annually, but the annual fluctuations have been large.
In the next twenty years, even more than 700 new apartments would be needed, of which an even larger share, almost 000 percent, is directed to the fourteen largest urban areas. The share of the Helsinki region alone would be almost half.
In the study, working areas with a population of approximately 100 inhabitants or more are counted as large urban areas. The regional study focused on assessing the development of housing production needs in these regions. The starting point of the study has been the regional population forecast of Statistics Finland for the fall of 000 and the housing statistics published in May 2019.
The risk is pent-up demand and fast-paced production
The study has evaluated the impact of the corona pandemic on the need for housing production. In the years 2015–2019, housing production was considerably more lively than expected, and it was assumed to stabilize clearly in the years 2021–2025. However, due to the weakening of the economic cycle caused by the pandemic, the drop in the number of new apartment starts is getting steeper.
- The need for housing will not disappear anywhere, but the threat is that as a result of the economic effects of the corona crisis, housing production will collapse in the same way as during the financial crisis. In this case, the stagnation and stagnation of demand can increase the price of housing and make it difficult, for example, for young people to move in on their own. In production, a sudden drop is usually followed by a sudden rise, which is not in anyone's interest, Vainio says.
In the research report, it is estimated that the corona crisis will not leave more permanent marks on the need for housing, and the forecast up to 2040 has not been changed because of that.
- In some estimates, the corona has been seen to turn residential preferences away from cities and towards more spacious environments. The corona crisis has permanent effects on society, but the root causes of urbanization will not disappear anywhere. The corona crisis will probably only change the qualitative preferences of housing, estimates the chief economist of Rakennusteollisuus RT Jouni Vihmo. Vihmo was the chairman of the steering group representing the parties involved in the Housing Demand 2020–2040 study.
Background information about the study
The study was carried out by VTT and its customers are Rakennusteollisuus RT, the Ministry of the Environment, the Central Association of Finnish Trade Unions SAK, Municipal Finance and Suomen Hypoteekkiyhdistys.
VTT's Housing Needs 2020–2040 study uses 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 to support especially the development of the community structure of the state and municipalities and as a tool for developers.
VTT made the previous forecast of the need for housing production in 2016, when it was based on the 2015 population forecast.
Materials:
Housing production need 2020-2040. VTT Technical Research Center of Finland, 2020. 35 p. (VTT Technology; No. 377)
- https://cris.vtt.fi/en/publications/asuntotuotantotarve-2020-2040
All materials from the announcement event
For more information:
- Terttu Vainio, specialist researcher, VTT phone 040 508 0983
- Jouni Vihmo, chief economist, Construction Industry RT, tel. 050 520 1636
- Mikko Friipyöli, special expert, Ministry of the Environment, tel. 029 525 0375
- Timo Vesala, Chief Economist, Municipal Finance, tel. 050 5320 702
- Hannu Jouhki, Director, Growth and Influence, Central Confederation of Finnish Trade Unions SAK, tel. 040 669 0519
- Juhana Brotherus, chief economist, Finnish Mortgage Association, tel. 050 384 9479
- Merja Vuoripuro, director of communications, Rakennusteollisuus RT, tel. 040 587 2642