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Mortgage lender: Full speed ahead for urbanisation

Housing loan specialist Hypo reports that 70 percent more housing was constructed in early 2017 in the capital region, and that housing prices are expected to rise 1.3 percent this year.

Katu Helsingin Kruununhaassa.
People are being packed into cities. Image: Henrietta Hassinen / Yle

Research by the mortgage lender Hypo suggests that Finland's population continues to flow from the countryside to the cities. Property price inflation in the capital continues to race ahead, with prices predicted to soar by 2.5 percent two years in a row.

The price hike is due to continued housing expansion, says Hypo. About 30 percent more apartments and houses were built across Finland than in the same period of last year, but in and around Helsinki the figure was 70 percent.

Housing prices will go up nationwide by 1.3 percent this year and 1.5 percent in 2018, according to credit institution Hypo's market research.

Hypo says that urbanisation continues to push on, with overall Q2 housing transactions rising by 8 percent due mostly to the capital region's construction rush.

Changing urban demographics

The Hypo report indicates that the scale of urbanisation in Helsinki and Tampere has even exceeded the predictions made by the cities themselves. Head Hypo economist Juhana Brotherus criticises the government's budget decisions, saying they do not take the insistent demands of fast urbanisation into account.

"When companies and people voluntarily move to a small number of growth centres, it transforms the structure of the economy and of the housing market," Brotherus says.

Hypo says that a change has occurred in the preferences of families with children. Apartments near to city centres are gaining popularity among families, who join students, single people and the elderly in their demand for convenient living surroundings.

"In Helsinki we are experiencing a boom in inner city families with children. Families seek after two-room apartments in the centre for the better adjacent services and environmental variety," Brotherus says.

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