Recent changes in the Finnish rental market: capital region

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In some of our previous blogs, we have looked at the rental market in Finland. We have, for example, talked about Finnish rental prices. In this one, we’ll look at some recent changes in the Finnish rental market. We will focus particularly on the Helsinki metropolitan area. 

Our examination is mostly based on a recent blog by Martti Korhonen, Paula Paavilainen, and Mika Ronkainen of Statistics Finland. We do, however, use other Statistics Finland resources as well. 

Increases in rental living in Finland 

As we explained in one of our blogs, rental living in Finland is most common among 20-29 year-olds. 

The share of all households living in rental homes in Finland has, however, been increasing over the years. In 2009, 30 % of all households lived in rental homes. By 2019, their share had increased to 34 %.

Of those living alone, nearly 50 % lived in rented homes in 2019. Ten years prior, about 44 % did. 

Although the increase in the proportion of households living in rental homes has been bigger in age groups below 40, the proportion has increased overall as well. 

In 2020, 61 % of households comprising those below 40 lived in rented homes. In 2010, this share was 52 %. During this period, the greatest increase in rental living was among 25-29 and 30-34 year-olds.

Rental living is the most common in Finland in cities. In the largest Finnish cities, about 46 % of households live in rental homes. In mid-sized Finnish cities, such as Jyväskylä and Kuopio, about 41 % of households do. Elsewhere in Finland, this percentage is around 26 %.

In all of these areas, the proportion of households living in rental homes has increased during the last decade.

So, in general, the trend is tilting towards rental living in a country where owning one’s home has long been the norm (and the ideal). 

The pandemic, furthermore, added its own flavor to the Finnish rental market, especially in the capital region. We’ll talk about that next. 

Are you looking for a rental home in Finland? Check out our “Renting a Home in Finland” online course!

Recent changes in the Finnish rental market: capital region

Statistics Finland data shows that in the capital region there has been a clear increase in the availability of rental homes during the pandemic. Here we mean the period from March 2020 until now. 

The time rental apartments stay available on the market has also increased. In September this year, the average number of days a rental apartment for advertised was 23. A year before it was three days less. 

Statistics Finland also has data on whether a home is empty or not. Based on that data as well more apartments are available now than at the end of 2020. 

According to that data, in Helsinki in September 2021 a little over 6 % of homes that had occupants at the end of 2020 were now vacant. In March 2021, that same percentage was just below 4 %. 

It is thus clear there is an increasing number of rental homes on the market. Korhonen, Paavilainen, and Ronkainen attribute this increase in supply to the absence of students (students study remotely) and an increase in rental apartment production. 

 A reasonable hypothesis at this point would be that the increasing availability of rental homes in the capital region would push rents down. Korhonen, Paavilainen, and Ronkainen looked at that as well. 

Effects on rental prices

We’ve discussed rental levels in Helsinki in a previous blog. We have also briefly mentioned rental price trends in Finland

For example, in the second quarter of this year, rents in Finland had increased by 0.9 % compared to the year before. In late spring and early summer, the average rent in Finland was 15.10 € per square meter.  For new leases, it was 16.10 €. 

In the capital region, rents were obviously higher. There, the average rent by square meters was 20.20 € for all rental relationships. It was 21 € for new leases.

A similar rate of increase continued in late summer and early fall this year. Then, the average rent in Finland was 15.30 € per square meter.  For new leases, it was 16.50 €.

Again, rents In the capital region were higher. Now the average square meter rent there was 20.30 €. For new rental agreements, it was 21.40 €.

Korhonen, Paavilainen, and Ronkainen point out that this current rate of increase is lower than it has been in the past. For example, in late 2019 the rate of increase in studio apartment rents in Helsinki was about 1.6 %.

Especially with new studio apartments, current rents per square meter for new rental agreements in almost all areas of Helsinki are now lower than they were prior to the pandemic. 

In late 2019 and early 2020, the average rent per square meter for new studio apartments in central Helsinki was around 30 €. Now it’s around 29 €.

Also, the gap in the rental price of new and old rental apartments in the Helsinki area has diminished somewhat.

Thus, there is thus at least some indication that the production of new rental units and decrease in demand also affect rents. If not by reducing them at least by slowing down rental increases. It does, then, seem that currently, the rental market is the renter’s market. 

Looking for a rental home in Finland? We tell you what to expect and how to do it in our video course “Renting a Home in Finland”. Available in our online store.

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Minna
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