A construction worker walked on scaffolding at the construction site of a block of flats in Helsinki on 28 March 2023. Construction began on a total of 1,734 flats in Finland in January, signalling a drop of 835 from January 2021, according to data from Statistics Finland. (Emmi Korhonen – Lehtikuva)

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THE NUMBER of tower cranes on the horizon – an indication of how well the economy is doing, according to an old adage – has decreased, reports YLE.

Data from Statistics Finland reveal that building contractors began construction on a total of 1,734 flats in January, signalling a drop of 835 from January 2021. At the same time, the number of vacant newly built flats is high partly because of a high number of newly completed flats and partly because of a slowdown in sales.

In January, building contractors completed construction on 3,025 flats, 1,706 more than two years earlier.

The Federation of Real Estate Agency revealed to the public broadcasting company that the number of newly built flats sold was 80 per cent lower in January 2023 than in January 2021 in Jyväskylä. Sale times in the city, meanwhile, have tripled in the past two years.

The drops in sales have been even more dramatic in Helsinki, Espoo, Turku and Oulu.

“There’s the energy crisis, as well as the rises in interest rates, maintenance fees, construction costs and real estate maintenance costs – we’ve had all sorts of rises,” explained Tuomas Viljamaa, the managing director of the Federation of Real Estate Agency.

“The purchasing behaviour of people has changed. The building time for a high-rise building in the city centre can be 20 months, meaning the customer can postpone the purchase decision, monitor how the global situation calms down and how the project moves forward,” Janne Särkkä, the managing director of OP Koti in Central Finland, commented to YLE.

“We have a lot of factors that are aligned differently than two, three years ago.”

One reason for the slowdown in sales is the wariness of real estate investors. The surge in interest rates has discouraged investors from building up their portfolios, as evidenced by the high number of unsold small flats, which are usually targeted by investors.

Viljamaa indicated to the public broadcasting company that the decline in the number of new construction projects is not necessarily a negative development.

“You could say that we’ve built beyond our needs in recent years. The positive thing about that is that price increases haven’t got out of hand,” he elaborated, also drawing attention to the role of the central administration.

“In circumstances where building exceeds needs, you should react by decreasing the building of state-subsidised rental units and other units subsidised by ARA [the Housing Finance and Development Centre of Finland].”

Aleksi Teivainen – HT

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