Housing | In the capital region, rents rise more slowly than in the rest of Finland – “There has never been a situation like this before in this millennium”

Apartments The development of rents has differed between the capital region and the rest of Finland, says Statistics Finland.

The rents of self-financed rental apartments rose by half a percent in the capital region in April-June this year compared to last year. In the rest of Finland, rents rose by two percent in the same period.

Rents in the capital region have therefore risen clearly less compared to the rest of Finland.

The situation is the economist of Finnish landlords Eemeli Karlssonin according to exceptional. The capital region has been declining in the development of rents for several years.

“This kind of situation has never happened before in this millennium. Rents in the capital region and the rest of Finland developed fairly evenly until the beginning of 2022, after which rents in the capital region have clearly grown more slowly than other large cities,” says Karlsson.

Rental development according to Karlsson, there is an unequivocal reason for the differences: supply.

“There is now an oversupply of rental apartments in the capital region. Because of that, the market cannot afford to raise rents. If the rent is raised, the risk that the tenant will change to another apartment increases,” says Karlsson.

Helsingin Sanomat reports earlier in July, that Espoo has a record number of vacant rental apartments. For example, according to the Oikotie online service, there were more than 3,700 vacant rental apartments in Espoo at that time.

Oversupply according to Karlsson, is more in Vantaa than, for example, in Helsinki. Rents for self-financed rental apartments in Vantaa rose by only 0.3 percent. Rents for studios have even decreased in the central area of ​​Vantaa.

According to Karlsson, the supply also explains why the prices of rental apartments have risen more in other parts of Finland. For example, rents in Oulu rose by three percent in April-June.

“There is not the same oversupply of rental apartments in Oulu as in the capital region. Oulu is a growing city with a healthier market balance than, for example, Helsinki.”

Of some however, apartment rents have risen more in the capital region than in the rest of Finland. This has happened, for example, with government-subsidized Ara rental apartments.

Rents for Ara apartments rose by 5.6 percent in the capital region in April-June, while the increase was 4.1 percent in the rest of the country. The differences are therefore the opposite of those in self-financed rental apartments.

According to Karlsson, the rent development of Ara apartments is due to the differences in the determination of the rent of these apartments. The rents of Ara apartments are determined according to the so-called cost principle. The rent is not determined according to the market, but according to the financing costs of the apartment and the maintenance costs of the property.

“When the interest rates and maintenance costs of these semi-detached apartments have risen, they have also been reflected in the rise in rents. The same issues related to supply do not apply to these apartments as to rental apartments on the free market,” says Karlsson.

Capital region according to Karlsson, rents for rental apartments rise more slowly than the rest of Finland as long as there is an oversupply of apartments.

“Fewer apartments have been completed this year than in recent years. It may be reflected in the future as a reduction in supply.”

However, Karlsson estimates that the differentiation of housing costs will continue in the near future.