Property costs for housing companies in Finland continue to rise, new report finds

By admin On Sep 17, 2024

Real estate transactions at the Kiinteistömaailma office in Helsinki. LEHTIKUVA

According to the latest Indeksitalo 2024 report by the Finnish Real Estate Federation (Kiinteistöliitto), property management costs for housing companies have continued to rise significantly across the country. The only exception to this trend was in electricity prices, which saw a decrease. While the rate of cost increases has slowed compared to the past two years, overall expenses remain high.

The report shows that municipal property costs have increased by an average of 4.4% from the previous year.

Excluding electricity, costs have risen by 6.2%. Key contributors include a 12.3% rise in land property taxes, a 7% increase in district heating costs, and notable hikes in waste management and water services. However, electricity costs dropped by 12.5%, building on last year’s 24% decrease.

Significant Variation Between Municipalities

The report highlights stark differences in cost changes across the 59 cities and municipalities surveyed. While costs rose in 53 areas, two—Raisio and Hyvinkää—saw declines of around 3%. Vihti experienced the highest cost increase at nearly 17%, or 19% when excluding electricity.

Helsinki, Järvenpää, and Vihti topped the list for the highest municipal property costs, with Helsinki now charging €4.33 per square meter per month, followed closely by Järvenpää and Vihti at €4.10. The national average for all cities is €3.38 per square meter, up 15 cents from the previous year.

On the other end, Kempele, Mustasaari, Kokkola, and Rauma recorded the lowest property costs. In Kempele, property costs stand at €2.77 per square meter per month, with Mustasaari and Kokkola both at €2.80.

Large Cost Differences for Family Homes

The cost differences between municipalities are significant. For a 90-square-meter family home, annual property costs in Helsinki now reach approximately €4,680, compared to €2,990 in Kempele—a difference of nearly €1,700 per year. The increase in Helsinki translates to around €400 more per year for residents compared to last year.

Electricity Prices Decrease, But Basic Charges Rise

While the cost of electricity itself dropped by 12%, basic fees and transfer charges continue to rise. The price decrease is largely due to a 22% reduction in energy costs, but basic energy fees increased by 11%, and network transfer fees by around 2%. Despite these reductions, the overall electricity cost is still over one-third higher than it was in September 2021.

Waste and Water Costs Continue to Climb

Waste management costs rose by an average of 6.1%, driven by increases in mixed waste and basic service fees. However, the cost of organic waste collection saw a slight decrease of 4.1%. Water service costs also surged, with an average increase of 5.5%, marking an acceleration from last year’s 4.2% rise.

District Heating and Property Taxes See Sharp Increases

District heating costs rose by an average of 7%, with some municipalities experiencing hikes as high as 30%. Vihti, Uusikaupunki, and Varkaus saw the steepest increases. In contrast, Hyvinkää and Lempäälä saw minor declines in heating costs.

Property taxes for land increased by an average of 12.3%, with building property taxes rising by 3.1%. Most municipalities faced mandatory tax rate hikes, though Riihimäki was an exception, where land property taxes dropped by 10.3%.

Largest Cities See Mixed Trends

Among Finland’s ten largest cities, property costs rose by an average of 4.7%. Helsinki, Pori, and Kuopio saw the most significant increases, while costs in Turku remained largely unchanged. Despite these rises, Oulu, Pori, and Vantaa continue to have the lowest property costs among the largest cities, with Oulu charging €3.02 per square meter per month.

The Indeksitalo 2024 report offers a detailed look at how property costs are evolving across Finland, showing both regional disparities and overall cost trends that impact housing companies and residents alike.

Source: www.helsinkitimes.fi