The sale of new homes has slowed in Finland, but a recent report by the VTT Technical Research Centre of Finland suggested that tens of thousands of new homes will need to be constructed every year to meet expected demand.
VTT's report said that Finland needs to build between 31,000 and 35,800 new homes per year over the next couple of decades.
The larger figure in their estimate reflects a population forecast from Statistics Finland, while the smaller number is based on a finance ministry forecast.
A total of 600,000 to 700,000 new homes need to be built by 2045, the report suggested.
The construction of new homes has plummeted in recent years. In 2023, only about 21,000 new homes were built — the lowest figure seen in the past decade. No clear recovery is expected, according to the report.
"If construction levels do not rise in the coming years to meet demand, prices could increase, and a new growth spike may follow," said Terttu Vainio, a specialist at VTT.
According to a recent forecast from the Pellervo Economic Research (PTT) institute, housing prices in Finland are set to rise slightly this year.
Strongest growth expected in Helsinki and Tampere
Population forecasts suggest that he need for new homes is largely being influenced by net immigration, but there are other factors, as well.
The report said migration within Finland also drives demand for new homes, as populations in major urban areas are projected to keep growing. The report stated that 85 percent of the new homes will be needed in these areas, with the strongest growth anticipated in areas around Helsinki and Tampere.
Other factors affecting demand include household sizes and housing stock turnover. In a similar report published five years ago, the key driver of new housing demand was an increase in single-occupancy households.
According to VTT's Vainio, that trend continued even more than expected.
"[Previously] we estimated that by 2029, 51 homes would be built per 100 people, but this ratio was already reached in 2023. In the new forecast, the rate of development has slightly slowed, with the expected ratio being 53 per 100 by 2045," he said.
The VTT report was commissioned by the Confederation of Finnish Construction Industries RT, Ministry of the Environment, Association of Finnish Cities and Municipalities, MuniFin and Finance Finland.
New home sales stagnate
Last autumn, around 5,000 newly constructed homes remained unsold, according to a group led by the finance ministry. The group noted that the number of unsold homes was unusually high, and sales had slowed significantly.
Veera Holappa, senior economist at Pellervo Economic Research PTT, suggested that the decreased demand from real estate investors was behind this trend.
"New homes typically go to real estate investors, but when interest rates rose, they stopped buying. This led to a sharper drop in demand for new homes compared to older ones," Holappa explained.
Construction company YIT announced last week that it had managed to nearly halve the stock of vacant new homes by offering discounts and other incentives to buyers.
YIT's CEO, Heikki Vuorenmaa, suggested that the housing market had slightly recovered compared to last year, but said construction projects remain low.
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