Housing expenses will account for a growing part of monthly income in future, according to new economic research from the Finnish think tank Pellervo Economic Research (PTT). Their study of 21 cities in Finland forecasts that housing costs will go up by an average of 2.5 percent over each of the next three years.
The increase will be most pronounced for people who own their flats instead of renting, as they will have to contend with higher maintenance and repair costs, PTT says.
Expenses are predicted to go up by 2.9 percent on average for owner-occupied apartments, 2.5 percent for rental occupants and 2.1 percent for owners of single-family detached homes.
Capital city dwellers hardest pressed
The PTT economic think tank, founded by agrarian interest groups in 1979, says that Finnish house owners will not be as sharply affected by the trend, due to the prevailing low interest rates and sluggish house price development across the entire country. Increases in electricity and oil prices are also predicted, however, which would strain homeowners' finances.
Research shows that it is clearly more expensive to live in the capital city vicinity, where prices are surging the most. Whereas the average cost of housing as a percentage of income in Finland now stands at 27 percent, a single-occupant residence in Helsinki accounts for 37 percent of a resident's average take-home salary.
More people in need of housing benefits
The Finnish Real Estate Association and the Finnish Home Owners' Association, who combined to commission the study, have both expressed their concern that housing cost increases are outstripping wage increases.
"Growing housing expenses only increase the need for housing benefit, which are already being paid out in Finland at an annual rate that approaches two million euros," says the home owner advocacy group's executive director Kaija Savolainen in a release.
The Finnish Real Estate Federation says there is a danger that growing housing expenditure will prevent people from relocating for work purposes.
The Federation proposes that rising taxes in real estate should be curbed. It is also feared that the municipal administration shake-up in the pipeline could create pressure to jack up property taxes, an event that the PTT research also predicts.
"The ability of taxpayers to bear [ever-increasing] property taxes is not without end. A hike in property tax cannot be seen as a means to finance every economic policy reform," says the Real Estate Federation's chief economist Jukka Kero.