This week Yle News' podcast All Points North asks where Finland's property market is heading, and how young people can gain a foothold.
With demand for homes going through the roof in urban growth centres like Helsinki, Tampere and Turku, housing prices will continue to rise unless a financial crisis hits Finland. That's according to Juhana Brotherus, chief economist at mortgage lender Hypo, who told All Points North that the skyrocketing prices do not necessarily reflect a housing bubble in sought-after urban areas.
"There is more demand than supply. Housing prices will continue to increase in areas like Helsinki and Tampere," Brotherus said.
This does not bode well for young adults looking to buy homes in big cities, he admitted.
A pipe dream
With home ownership rates declining among millennials, the dream of owning a home is slipping further out of reach.
Eero Löytömäki, chair of the Finnish National Youth Council Allianssi, says that's because they have it worse than previous generations.
"We are the children of two recessions in Finland — one in the 1990s when we were kids — and the 2008 financial crisis that hit us hard when we were studying or graduating. It’s been difficult for young people to get jobs, especially long-term ones. We can’t afford mortgages," Löytomäki explained.
He says that Finland's 20 and 30-somethings are worried about their prospects for the future.
"A survey found that only one in four young people in Finland think they will be better off than their parents," he added.
Banks tighten purse strings, investors swoop in
Housing in Finland has been financialised just as elsewhere in the world, according to Brotherus. This means property investors are hiking up the prices of small urban homes that would otherwise cater to young buyers.
"The prices of smaller apartments that youngsters usually buy as starter homes have increased the most due to the rise of property investors," he said.
Securing a mortgage in Finland today generally requires a 15 percent down payment, although rules for first-time buyers are more relaxed, as they may only need to put five percent down of the purchase price, according to Brotherus.
Cloudy with a 50-50 chance of a home
So how likely is it that kids growing up in Finland today will become homeowners?
"It’s probably a coin toss," said Brotherus said. “At the moment in Helsinki, Tampere and Turku, the larger cities in Finland, approximately 50 percent of people live in their own homes and 50 percent rent. It’s hard to see any significant changes to this number going forward."
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The All Points North podcast is a weekly look at what's going on in Finland. Subscribe via iTunes (and leave a review!), listen on Spotify and Yle Areena or find it on your favourite podcatching app or via our RSS feed.
This week's show was presented by Zena Iovino, produced by Priya Ramachandran D'souza, and the sound designer was Laura Koso.