Rental housing market

In Finland, there are approximately 2.5 million apartments with permanent residents, of which roughly 32 per cent, or 800,000, are rental apartments. In 2014, there were approximately 1,340,000 rental housing residents. It is estimated that the popularity of rental housing continues to increase. According to Statistics Finland, already more than half of 20–29-year-olds were rental housing residents in 2014. A total of 41 per cent of rental apartments were privately financed.

The majority of rental apartments in Finland are owned by individual private landlords. In addition to them, the operators in the rental housing market include professional rental apartment owners, housing investors, housing funds and municipal rental housing companies.

Overall demand for rental housing remained stable. The disparity of the market between growth centres and other parts of the country intensified further. The weak economy and uncertainty with regard to economic development were seen in a slight fall in the prices of owner-occupied apartments throughout the country, except in the capital region.

Demand for rental housing was good in the Helsinki Metropolitan Area. Once again, the highest demand was for studios and one-bedroom apartments. In other urban growth centres, demand for rental housing mainly continued along the same lines as in the previous year, again centring on smaller apartments and newly constructed locations, as in the Helsinki Metropolitan Area. Demand for old large apartments declined. In areas where the economy is slowing down, supply exceeded demand. For many players, this was reflected in decreasing occupancy rates in 2015. Demand for the most expensive rental apartments continued to decline.

New construction clearly focused on privately financed rental apartments. However, it was impossible to take advantage of the slight fall in contractors’ prices as desired, because slow zoning processes and expensive design solutions resulting from strict plan provisions weakened the conditions for the production of rental housing.

Local market situations were also reflected in local tenant turnover: the lowest turnover was experienced in the Helsinki Metropolitan Area and the surrounding municipalities, the highest in Oulu.

Rents across VVO’s apartments as a whole increased by an average of approximately 3.2 per cent year-on-year. Rents for privately financed apartments increased by about 2.9 per cent. Rents for state-subsidised ARA apartments rose faster than those for privately financed rental apartments: the annual increase amounted to 3.6 per cent. Rents are expected to rise again in 2016, but at a more moderate rate.