Helsinki’s Keski-Pasila construction site. More than 35,000 new homes are needed annually. LEHTIKUVA
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Finland must build between 31,000 and 35,800 new homes per year over the next two decades to meet housing demand, according to a report by the VTT Technical Research Centre of Finland. The total need by 2045 is estimated at 600,000 to 700,000 homes.
The figures are based on population forecasts from Statistics Finland and the Ministry of Finance.
Despite a declining birthrate, the demand for housing remains high due to factors such as net migration, urbanisation, and a growing number of single-occupancy households.
The construction of new homes has dropped significantly. In 2023, only about 21,000 new homes were built, marking the lowest level in a decade. No clear recovery is expected, according to VTT.
“If construction levels do not rise in the coming years to meet demand, prices could increase, and a new growth spike may follow,” said Terttu Vainio, a specialist at VTT.
Last autumn, Finland had around 5,000 unsold newly built homes, an unusually high number. The slowdown is partly due to decreased interest from real estate investors, as rising interest rates have made investment in new properties less attractive.
“New homes typically go to real estate investors, but when interest rates rose, they stopped buying. This led to a sharper drop in demand for new homes compared to older ones,” said Veera Holappa, senior economist at Pellervo Economic Research PTT.
The report suggests that 85% of the new homes will be needed in urban areas, with the highest demand expected in Helsinki and Tampere.
A key factor is the rise in single-occupancy households. In a previous report, it was estimated that by 2029, Finland would have 51 new homes per 100 people. However, that ratio was already reached in 2023. VTT now forecasts 53 homes per 100 people by 2045.
“The number of single-person households has grown even faster than expected,” said Vainio.
Despite fluctuations in population projections, housing demand remains unchanged. The Ministry of Finance predicts Finland’s population will reach 5.8 million by 2045, while Statistics Finland projects six million. The difference is mainly due to net migration estimates.
Despite a recent rise in housing prices, new home sales remain sluggish. Construction company YIT has reduced its stock of unsold homes by offering discounts and incentives, but overall, construction remains low.
YIT CEO Heikki Vuorenmaa said the housing market has improved slightly compared to last year but warned that recovery is slow.
VTT’s report was commissioned by the Confederation of Finnish Construction Industries RT, the Ministry of the Environment, the Association of Finnish Cities and Municipalities, MuniFin, and Finance Finland.
HT
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Source: www.helsinkitimes.fi
