A Third of Finland's Housing Stock Will Soon Be Empty

A large portion of Finland’s housing stock is already empty, and the situation will get worse in the coming decades.

Aktia’s chief economist Lasse Corin raises the idea of a housing scrapping fee as a solution to the problem of empty apartments.

According to OP Pohjola’s estimate, up to a third of the housing stock will become available on the housing market over the next 20 years due to the aging of the population.

Homeowners are getting older, which will increase this housing supply at some point. Oversupply is believed to arise especially in small towns and areas experiencing migration losses.

The phenomenon is already visible, says Hypo’s chief economist Juho Keskinen in the Market Council program.

“We already have 11 percent of Finland’s housing stock empty. We already have municipalities where it is 30 percent. Every third apartment is empty,” says Keskinen.

Such oversupply means low prices and difficult resale of apartments, but on the other hand, housing or the so-called “housing service” is quite affordable.

In any case, the aging of the population will further deepen the differentiation of the housing market. Cities will continue to be attractive in the future, but apartments will remain empty in many areas. What will happen to empty houses?

“In areas with a loss of housing, some of them will also remain with the municipalities and some of them will end up with the state and, consequently, also back with those municipalities. In recent years, the value of housing assets that has ended up with the state has probably been around 60 million,” Keskinen says.

But what is the fate of empty apartments? Aktia’s chief economist Lasse Corin raises the idea of a housing scrapping fee.

“I wonder if there should be something like a housing scrapping fee, because there are certainly apartments for which no takers can be found, even at zero price. Wouldn’t it be better not to try to scrap or demolish apartments for which no takers can be found,” Corin asks.

“Apartment buildings can be a bit more difficult, because there may be empty apartments. But if there are apartments for which the housing company does not receive any compensation, then it is a big burden on these other shareholders.”

The idea of a scrapping fee at least clashes with the difficult situation of public finances.

“There has been a discussion about these demolition grants. Of course, we have to think about the overall situation of public finances. And then we come to questions of fairness, which areas, which properties will get them, if we start giving them to everyone, it will be quite expensive,” Keskinen points out.

Source: Kauppalehti (in Finnish)