The Finnish Construction Industry (RT) is proposing measures to speed up the recovery of construction and strengthen the operating conditions of the sector. The most important thing now is to increase confidence and incentives in the housing market, support essential renovation projects and mitigate the cost increase caused by fuel prices.
The construction sector continues to be exceptionally weak. Housing production has collapsed to the level of the 1950s, which cannot possibly meet the needs of urbanization and economic growth. This year will be the fourth consecutive year in which housing production will fall well below 20,000 units.
The downturn in the Finnish economy and news from around the world are further weakening consumer confidence, which is directly reflected in the housing market. On the other hand, without growth in domestic consumption and the housing market starting to take off, the economy will not grow either. Every year, Finland falls behind VTT's housing production needs calculation based on population growth forecasts, which is unsustainable in terms of growth and economic development.
"What is needed now is a sufficiently significant and fast-acting growth package from the spending limits, which will restore confidence in the housing market, accelerate housing sales and improve the conditions for construction," CEO of the Construction Industry Association RT Aleksi Randell highlight.
Easing financing and eliminating the asset transfer tax would promote housing construction
In the spring 2025 budget session, the government agreed on economic growth measures to develop labor mobility and the functioning of the housing market. As part of this work, a housing finance study group was set up to find solutions to bottlenecks in housing and construction financing by streamlining regulation. The study group published its report last week. The Finnish Construction Industry Federation RT participated in the study group's work.
RT considers the study group's recommendations to be in the right direction, but insufficient given the exceptionally difficult economic situation. The task given to the study group by the government was ambitious, and the goal of streamlining regulation should have been reflected more strongly in the recommendations. RT demands that the government, in addition to the study group's recommendations, also examine the means that the working group analyzed during its work during the budget process.
"The most effective way to stimulate a completely stagnant market would be to completely abolish the transfer tax. Eliminating such a residual stamp duty would best implement the government's desire to develop labor mobility and housing market dynamics," says CEO Randell.
A change in the capital transfer tax has been found to be an empirically effective measure. In the UK, a one percentage point reduction during a downturn increased housing market turnover by 20% in the short term. In this cyclical situation, a temporary abolition of the tax, for example for one year, would be most effective. This would encourage buyers to move quickly and open up stalled retail chains.
Support is needed for renovations and fuel costs
A ten percent fixed-term investment grant, which would bring forward the launch of renovation projects, would also provide the much-needed boost to the market. A fixed-term investment grant of 100 million euros for renovation construction and various renovation projects in housing companies would launch projects worth one billion euros. This would create work for 14,000 Finns for a year. At the same time, these investments would return over 400 million euros to society in taxes and tax-like payments.
In addition, the war in the Middle East has rapidly increased fuel prices, and the unstable situation continues to make price developments difficult to predict. This is putting companies operating in the transport and machinery sectors in a tight spot, which is why RT proposes re-introducing a fixed-term fuel subsidy. The subsidy mechanism would safeguard the operations of sectors critical to security of supply even if prices start to rise sharply again.
"Industries that depend on heavy vehicles and large machinery are very critical to security of supply. In them, companies are responsible for the movement of people and goods, as well as the smooth operation of traffic routes, municipal engineering, and industrial material and raw material logistics," RT's Deputy CEO Paavo Syrjo justifies.
The construction sector is very tax and labor intensive, and its indirect effects on the growth of other industries, such as trade, are significant.
More information
Aleksi Randell
CEO
aleksi.randell@rt.fi +358 9 129 9201Confederation of Finnish Construction Industries (CFCI)
Assistant: Lotta Räty
Lauri Pakkanen
Director, Public Affairs
lauri.pakkanen@rt.fi +358 50 522 7797Confederation of Finnish Construction Industries (CFCI)