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SATO President and CEO Sipola at City Living in Jätkäsaari event: Expensive urban districts resulting in smaller homes

Sep 1, 2018

Speaking today at the opening of the City Living in Jätkäsaari event in Helsinki, Saku Sipola, President and CEO of the rental housing provider SATO, challenged Finnish political parties to include the cost of housing as one of the themes of the parliamentary elections coming up in April 2019. According to Sipola, urbanisation is playing a decisive role for Finland's economy and development right now, but at the same time the new districts of cities are expensive."This results in at least one consequence: smaller homes."

Finnish urban regions are receiving constantly increasing migratory flows as most new jobs are created in urban regions. Economic growth, positive employment development and people's wellbeing need attractive urban regions as their drivers. The high cost of land use planning and plots of land in the new districts of the Helsinki Metropolitan Area in particular make homes expensive.

According to Sipola, at least in the rental housing market, studios and compact two-bedroom homes are currently the most popular apartments.

-The high price level of the new urban districts results in home sizes getting smaller to better match people's payment capacity, Sipola points out. 

-The political parties should adopt a joint target as regards the post-election government programme: housing must not get more expensive. To reach this target, commitments will obviously be required at the various levels of decision-making. Sustainable urbanisation cannot be achieved without sufficient housing supply suitable for the various income levels, and sufficient housing stock cannot be created without sustainable urban planning and housing policy with a long-term perspective.

Sipola perceives it as a challenge that many legislative reforms and other projects underway will further raise the cost of housing. The real estate tax reform will increase the real estate tax burden of growing cities, while the cut in the tax credit on loan interests will push up the rents of the biggest rental housing providers. At the same time, the costs of ARA-subsidised rental homes are set to grow if the planned minimum interest rate of 1.39% is to be targeted at loans that currently feature a lower rate of interest. Sipola also mentioned the scarcity of land use plan and plot supply, which is pushing housing prices higher.

-In the big picture, societal decisions play an important role overall: taxes and other tax-like payments account for more than 40% of the price of a new home in an apartment building.

-This is a real, recognised and shared problem. Developers as well as the authorities and decision-makers alike must therefore bear responsibility so that solutions can be found. The goal should be: urban living for more and more people."