Construction of new homes in Finland has reached its lowest level since the 1940s, signaling a downturn in the country’s housing market. Data from the Confederation of Finnish Construction Industries revealed that the number of new homes built this year has more than halved compared to 2022, dropping from over 37,000 to just 16,000. This represents a decline of 10% in the overall construction industry.
The construction group expressed concerns about the diminishing housing production, stating that the number of completed apartments may fall to levels not seen since the 1940s in the next few years. They attributed this decline to rising interest rates and costs, which have frozen both consumer and investor demand for new apartments as well as government-subsidized housing construction.
Jouni Vihmo, the chief economist of the Confederation of Finnish Construction Industries, emphasized that the construction activity in Finland will not improve until the interest rate outlook stabilizes. He believes that a recovery in the housing market would require a decrease in the stock of new homes and a rebound for older dwellings. However, Vihmo also cautioned that the construction sector, currently employing approximately 160,000 people, may soon witness a significant loss of up to 30,000 jobs.
The housing market decline in Finland has raised concerns about the country’s economic stability. With fewer construction projects underway, the industry will experience a slowdown, impacting various sectors that rely on it. Additionally, the decrease in construction may lead to a decrease in the supply of available housing, potentially driving up rental and property prices.
The Finnish government will likely need to take action to stimulate the housing market and support the construction industry. This may involve implementing measures to reduce housing costs, providing financial incentives for developers, and creating initiatives to encourage consumer demand for new homes. By addressing these issues, the government can help stabilize the market and safeguard against a prolonged downturn.
The housing market slump in Finland is not only a challenge for the construction industry and the economy but also for potential homeowners and renters. The decrease in housing production limits the options available to individuals looking to buy or rent a property, potentially leading to increased competition and higher prices in the market.
It is essential for stakeholders in the housing sector, including the government, construction companies, and consumers, to work together to find solutions that can revive the Finnish housing market. By addressing the underlying issues that have contributed to the current downturn, such as high costs and stagnant demand, Finland can create a more favorable environment for housing construction and ensure the availability of affordable housing for its citizens.
In summary, the housing market in Finland is experiencing a significant downturn, with construction of new homes at its lowest level since the 1940s. Rising interest rates and costs have led to a decline in demand for new apartments and government-subsidized housing construction. The industry is expected to face a drop of 10% this year, potentially resulting in a loss of up to 30,000 jobs. To revive the housing market, it is crucial for the government and industry stakeholders to address the challenges and implement measures to stimulate demand and reduce costs. This will not only benefit the construction sector but also ensure the availability of affordable housing for the people of Finland.