Editorial | Housing construction froze, but the population is growing

TThe Statistics Finland announced two measurements on Tuesday, which, when combined, detect an ever-increasing problem. Statistics Finland told, that the cubic volume of granted building permits decreased by 20 percent in January–March from a year ago. In the same period, building permits were issued 56 percent less than a year earlier.

The sale of apartments froze when interest rates rose, inflation accelerated and economic growth froze. In particular, the sale of new apartments has completely stopped. For example, the large company YIT told in its interim report that in the first quarter the number of completed unsold apartments rose to 1,359 apartments. The number has been growing steadily for a long time, and it is already putting a significant strain on YIT’s balance sheet.

“All housing starts took place in the first quarter in the Baltics and Eastern Central Europe,” the company said. In Finland, YIT did not start a single housing project.

Built by SRV told that in January–March it sold three self-built apartments – designed and built by SRV itself.

This complete stop of the housing market and construction does not match the basic flow of society, which the population growth figures tell about. Statistics Finland’s second Tuesday made public the survey reported that Finland’s population grew by more than 10,000 people between January and April.

Immigration, and especially the arrival of Ukrainians to Finland, has increased the number of people of working age between the ages of 20 and 64 for the first time in years. People are flowing to growth centers, and the freezing of the housing market will not change this trend.

KIf you combine these forces and take into account the time span of construction, you can see a couple of years from now: there will soon be a severe shortage of apartments and apartment builders in the growing cities.

Shortage means rising prices in a market economy. The rising cost of housing in growth centers weakens the availability of labor – especially in the low-wage service and care industries, which are already suffering from a labor shortage.

Economic research shows that urbanization promotes productivity growth. When this is the case, in a few years the housing market may also become an even worse brake on Finland’s productivity.

The editorials are HS’s positions on a current topic. The articles are prepared by HS’s editorial department, and they reflect the magazine principle line.