According to specialist mortgage lender Hypo, Finland will soon have just three urban areas experiencing genuine expansion: Helsinki, Tampere and Turku.
A fresh regional population forecast that the lender commissioned suggests that Finland will soon experience a wave of urbanisation, the era of the mega city. Many urban areas which have been growing up to now will see their populations shrink in the 2030s, Hypo projected.
The forecast calls for greater consolidation among cities to outlive the declining population trend. In the provinces too, growth centres will move from rural to urban areas. At the same time, cities will expand internally, meaning that their central districts will flourish while the outskirts will contract.
According to Hypo chief economist Juhana Brotherus, the next government will need to ensure that enough housing is available during the wave of expansion in the growth triad that includes Helsinki, Turku and Tampere.
"There is a lot of construction ahead because the need for new builds will continue, we need to see turnover in ARA homes, we will need assistance for relocation in the future as well as reliable transportation between the growth trio to ensure mobility of the workforce," Brotherus advised in a statement.
ARA is the state-owned Housing Finance and Development Center that is largely responsible for bankrolling affordable and so-called social housing.
Rising housing prices only in growth areas
Housing prices across Finland fell in 2018, according to Hypo. The institution said that prices rose only in urban growth centres in the Uusimaa, southwest Finland and Tampere regions in the couth of the country.
According to the lender’s data, prices fell for half of properties last year, meaning that half a million homes lost value.
The Hypo group’s forecast indicates that the rise in housing prices will stop this year and decline by 0.5 percent next year. It expects buyers to see price gains of two percent this year and 1.5 percent in 2020.
The only exception to the projection will be in the Helsinki region, where the institution expects housing prices to continue to climb, with demand especially high in the three-kilometre radius from the capital’s Central Railway Station.
Competition for housing is also stiff in Turku in the southwest, where prices are rising in tandem with economic growth.