Helsinki|university of Helsinki
Studios have been built with a frenzy in recent years. They have almost always gone into the pockets of investors and not as first homes for young people, claims urban geography professor Mari Vaattovaara.
“Still fewer young people have the opportunity to buy their first home in the capital region, and this is the reason for that,” says the professor of urban geography at the University of Helsinki Mari Vaattovaara and opens his laptop.
The screen shows statistics and numbers of the former system manager of Vaattovaara and the City of Helsinki Pekka Vuoren from an as yet unpublished study. Vuori is a statistician with decades of experience in the databases of the Helsinki region and, for example, in preparing population forecasts.
According to Vaattovaara, the opportunity for young people to buy their own small first home has dramatically weakened in recent years. The figures he presented on the screen give support to the claim – downright startling.
“In progress is a very rapid change in the way of construction”, says Vaattovaara.
“A huge number of small apartments have started to be built. The argument goes that when more are built, the price of apartments will fall and it will be financially possible for more and more people to buy their own apartment. But this doesn’t look like it in the light of the numbers.”
The research by Vaattovaara and Vuori shows that from 2015 to the end of 2021, a total of 31,000 studio apartments were completed in the capital region and Tampere. The studios made up 30 percent of the completed housing stock.
“Only six percent of these studios were owner-occupied apartments. Almost all the rest have gone to rent, i.e. practically to investors.”
For example, in 2019, more than half of the sold studios went to investors.
Vaattovaara indicates a statistic whose data has been extracted from Statistics Finland’s databases.
“You can see from these that although there have been a lot more small apartments – studio apartments and two-bedroom apartments – there are now fewer studio apartments as owner-occupied apartments than in 2015.”
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“In principle, small apartments go to investors.”
Clothing hazard stresses that the problem is particularly large in Espoo and Vantaa. Helsinki has better adhered to its own housing policy, i.e. small rental apartments have not been built as aggressively.
“It is important to remember that politicians decide on zoning, i.e. what is built and where – not investors.”
But when a lot of studio apartments are built, why don’t young people buy them as their first home?
According to Vaattovaara, the reasons are partly unclear. However, it is known that the annual number of first-time home buyers has decreased by 13,000 people in just over ten years.
According to Statistics Finland, at the end of 2018, less than half of the 30–34-year-old households lived in owner-occupied housing. Ten years ago, there were 58 percent of such housing associations.
More and more young people are postponing the purchase of an owner-occupied home until a later age, and the first home is purchased at an older age than before: in 2019, the average age of first-time home buyers was closer to 30 years, in the capital region 31. At the same time, families are being started later than before.
“One logical explanation for the situation is that small apartments go to investors by default.”
Many housing projects are not started until half of the apartments have been sold. According to Vaattovaara, the investors strike in between: they announce that they will buy half of the apartments so that construction can begin.
“Then the air is sucked into the yard, so to speak. Investors often wish for more and smaller apartments in the area, because it is of course more profitable for them.”
When the small apartments go to investors, the triangles and larger apartments remain. Vattovaara shows a new statistic.
“You can see from this that there are now much more large apartments as owner-occupied apartments than before. But they are often beyond the reach of young people, because in the capital region, for example, the average price of new 75-square-meter triangles is 465,000 euros.”
First home buying and getting a home loan is not made any easier by the fact that students nowadays have significantly more student loans than ten years ago.
According to Ylioppilaslehti, a master’s graduate had a student loan of around 20,500 euros at the time of graduation in 2021, compared to 6,600 euros in 2010. At the moment, interest rates are still noticeable on large loans.
Then we get to the question of eternity. Why should young people live in owner-occupied housing? You can also live in a rental.
Absolutely, Vaattovaara says. In his opinion, the lively Kallio, filled with small rental apartments, is “the best thing that has happened to Helsinki”. It is the lungs of the city.
“But young people should be able to live in an owner-occupied apartment, at least because according to numerous reports, the absolute majority of young people would like to live in an owner-occupied apartment, not a rented one,” Vaattovaara answers.
“At the moment, it’s like we’re driving young people into the forced rental pipeline.”
The “forced rental pipeline”, on the other hand, has very real effects on a person’s wealth in the long term, because rental housing does not accumulate assets like owner-occupied housing. The housing costs of a low-income renter living in the capital region are constantly high and also in retirement – especially if they cannot get a subsidized apartment.
Vaattovaara talks about dreams: young people must have the opportunity to dream of their own home.
“Finland is an owner-occupied housing society. If the opportunity to own a home starts to run away from certain groups of people, such as young people and immigrants, it creates differentiation within the cities, i.e. segregation.”
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