Half of older generation’s assets tied up in their homes

Home ownership accounts for a large proportion of Finnish assets. For this reason, many people stand to lose a great deal if housing prices take a dive. Adding to this, the exodus to urban areas continues in Finland, making the task of selling rural homes increasingly difficult.

Paperista tehty talo jolla on seteleistä tehty katto.
Panttikirjoja käytettään lainojen vakuutena talokaupoissa. Image: Ismo Pekkarinen / AOP

Statistics Finland figures show that over half of the assets of Finnish residents between the ages of 55 and 64 are tied up in their homes. According to 2013 numbers, older people have close to 300,000 euros in assets on average, with their residence accounting for 140,000 euros of this sum. The situation is similar for people over 65, too.

The situation creates problems when the home cannot be sold, or the property loses its value – a growing trend in Finland’s hard-to-reach areas. Homeowners in these increasingly unattractive areas stand to lose a big chunk of their investment.

“Home ownership is a significant portion of Finnish household wealth. If property values were to fall across-the-board in an area, it would have a real effect on the regional distribution of wealth,” says Statistics Finland’s senior statistician Timo Matala.

“It means that in declining regions, the assets levels would be reduced, or at least not grow at the same rate as in other areas,” said Matala.

Urbanisation is a threat

The problem is compounded by the draw to cities and growth centres with jobs. Emptying rural regions have fewer people living in them, making it harder to sell property.

If these rural assets can’t be liquidated, is there a chance that today’s well-heeled over-60s could be tomorrow’s low-income retirees? Chief Economist of the home financing and mortgage company Hypo Juhana Brotherus says it is a possibility:

“The bulk of senior securities we take for granted could disappear in the coming transition,” he said.  

He said a potentially catastrophic rural housing market will have an effect on every generation in Finland, as many families use inherited countryside property as a holiday home in the summertime, for example. 

Asset growth down to shares and equity

In more recent figures, Statistics Finland showed households’ financial assets grew by 3.7 billion euros during the second quarter of 2016 in Finland, while debts increased by 1.6 billion.

A majority of the total increase in households’ financial assets in this period, two billion euros, is explained by holding gains received from shares and other investments.

The state-owned data cruncher’s Matala points out that among older people, assets tend to be greater and more diversely spread out.

For example, Finnish residents between 65 and 75 own an average of 38,000-euros’ worth of shares and other equity, while the corresponding number for the rest of the population is 15,000 euros. Even among 55 to 65-year-olds, the number drops to an average of 18,000.

Figures show that people under 45 in Finland possess less than 10,000-euros’ worth of shares and other financing on average.

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