The historically low level of housing construction is now reflected in the housing supply in the Helsinki metropolitan area: the number of rental apartments available in Helsinki, Espoo and Vantaa has decreased by almost 30 percent since the beginning of the year. According to the Finnish Construction Industry Federation (RT), privately financed housing construction has not yet started sufficiently, so the state budget for next year must secure the conditions for subsidized production.
The decline in rental housing supply has accelerated especially after July. RT estimates that the rental housing market in the Helsinki Metropolitan Area is approaching a level where the shortage of housing will again begin to hinder the mobility and availability of labor.
"Now we are starting to see concretely what the historically low housing construction that has continued for years means. The amount of supply is decreasing sharply, but housing production is not getting going, even though the deficit is growing. This is exactly the dangerous combination that should be avoided," says the CEO of the Finnish Construction Industry Federation RT. Aleksi Randell.
According to RT, the lack of housing construction is no longer just a cyclical problem in the construction industry, but also affects the availability of housing in Finland's most important employment area. Therefore, state-supported housing production continues to have a cyclical policy significance.
Powers are falling too low
The level of interest subsidy and guaranteed loan authorizations for state-supported housing production next year is going to be too low in relation to the need. At the same time, the current year's authorizations will not be used, especially in the 20-year guaranteed loan model, the increased authorization for which only came into effect this year. Varke's method of applying the conditions has not enabled the full utilization of the authorizations, although there is interest in the model in the market.
"There is clearly a need in the market for a guarantee model, but the authority remains unused due to the applicable conditions. The conditions of the model must be reassessed without delay and the unused authorities from the current year should be transferred to next year. Pending projects that have already been planned and permitted in a long time should be implemented," says Randell.
Authorizations are also needed for basic improvements and repairs to the state-subsidized housing stock, in order to extend the life cycle of the building stock and improve energy efficiency. The need is not limited to the largest cities, and these repairs cannot in practice be carried out with other funding.
The government's debt constraints limit a significant increase in the mandates. RT therefore proposes to investigate whether the current state-subsidized housing stock can be exempted from long-term restrictions if the operators are able to refinance their loans. This would improve the conditions for affordable housing operators to launch new projects and increase the government's room for maneuver when deciding on interest subsidy mandates.
Cities' housing policy goals risk not being achieved
The goals of the largest cities, especially in segregated residential areas, for more diverse housing production are not being achieved as planned. The goal of getting privately financed owner-occupied housing production started in such residential areas is slipping away, which makes it difficult to achieve balanced development in the areas and increases the risk of segregation.
RT proposes that the state and cities work together to find a working model and programmatic solutions to the situation by utilizing land policy and financial means.
RT presents
- Transferring unused interest subsidy and guaranteed loan authorizations to 2027
- assessing the adequacy of the 2027 mandates in relation to the needs of the housing market
- Improving the mandate and terms of the 20-year guaranteed loan model
- exploring the possibility of relaxing restrictions on the current state-subsidized housing stock
- securing the conditions for the renovation and repair of state-subsidized housing stock
- joint land policy and financial measures by cities and the state to create a supply of affordable owner-occupied housing, especially in segregated residential areas.
For more information:
Aleksi Randell
CEO
aleksi.randell@rt.fi +358 9 129 9201Confederation of Finnish Construction Industries (CFCI)
Assistant: Lotta Räty