The conditions for new housing construction have not improved, and housing starts threaten to remain at a historically low level for the second year in a row. The prolongation of the difficult economic situation in construction requires the government's intervention to get housing production going, says Aleksi Randell, CEO of Rakennusteollisuus RT.
The weak economic situation in housing construction was discussed on January 30 in a round table discussion convened by Prime Minister Petteri Orpo, in which actors from the construction and financial sectors participated. The situation is widely shared among different parties.
The starting quantities of new self-financed apartments will probably come into effect next year at the earliest. Due to the long implementation times of the projects, the increase in the supply of apartments will not be seen until around 2027.
The result of the dive is a long-term deterioration of the construction industry's production and know-how capacity, as well as a housing shortage in the largest growth centers. Limited supply, on the other hand, increases housing costs and eats away at economic growth.
The biggest obstacles to housing construction are rapidly rising interest rates and insufficient demand, as well as financing problems due to the tightened credit policy. The room for maneuver of construction companies is also narrowed by the long-standing increase in construction costs and the large reserve of completed new apartments for sale.
"During the financial crisis, interest rates and costs adjusted. Now they are not flexible, and the special features of the domestic housing market make it difficult to adapt to the changed conditions. However, it is in Finland's interest to take care of the financing of housing construction and the supply of housing even in such an exceptional situation," says Aleksi Randell.
"The guidelines made by the government during the autumn budget rush to revive construction were in the right direction, but insufficient. The forecast that was the basis of the Government's decisions was more positive than the reality, even though we were already communicating the strength of the cyclical crisis in construction. Now, new, fast actions are needed from the state, when the seriousness of the situation is undeniable."
RT presents measures to strengthen the conditions for construction
Since there are few market-based solutions right now, the state must react quickly and efficiently. Rakennusteollisuus RT has proposed, among other things, an increase in state-supported Ara housing production and securing funding for non-profit housing construction as means of speeding up construction.
The interest subsidy authority for Ara production should be counter-cyclically increased this year from 1,5 billion euros to 2 billion euros in order to guarantee its sufficiency. In addition, the conditions of the interest subsidy models should be further improved and the interest subsidy granted to right-of-occupancy apartments should be continued.
In order to promote the availability of financing for self-financed housing production and to ensure the start of the necessary production, the state's temporary filling guarantee model should be introduced.
The position of first-time home buyers should be further strengthened with a separate interest subsidy and the government's top-up guarantee.
It is necessary to initiate an overall evaluation of financial market regulation, which is also aligned in the government program, in which the functionality of housing construction financing should be examined in a changed situation.
Renovation construction has decreased alongside new construction for the same reasons, i.e. due to rising interest rates and costs, as well as difficulties in financing. Renovation of housing associations should be supported with a temporary ten percent grant.
"The squatting of repair construction will further increase the repair deficit of our buildings at the same time as the building energy efficiency directive will set stricter requirements for improving energy efficiency," says Aleksi Randell.
According to Randell, there is a rush to prepare the measures so that they can be implemented and have an impact as soon as possible during the current year.
See also
RT's presentation at the event and proposals to the Government
Government notice 30.1.2024 January XNUMX https://vnk.fi/-/rakennusalan-tilanne-esilla-pyorean-poydan-keskustelussa
More information
Aleksi Randell, CEO, tel. 0400 500 822
Jouni Vihmo, chief economist, tel. 050 520 1636
Merja Vuoripuro, director of communications, tel. 040 587 2642
firstname.surname@rt.fi