Increasing housing production is the most effective way of keeping housing expenses under control
Decision-makers have been worried about rising housing prices in growth centres for several years. The most sustainable way of keeping the housing expenses under control is to build more apartments. If the demand for apartments is higher than the number of apartments built, the prices of apartments will increase. If zoning creates scarcity in plots suitable for construction, the plot prices will increase.
Helsinki increased its annual housing production target to 8,000 apartments by recently approving the housing and land use programme. The annual target of 3,500 apartments at the beginning of the 2000s and the target of 5,000 apartments valid a decade ago seem very modest today. And modest they were, with considerable consequences.
For the entire 2000s, the bottleneck in the residential construction in the Helsinki Metropolitan Area was the lack of plots, which created a shortage of apartments in the area. This has increased the prices of apartments and debts of households as well as slowed down labour mobility. The whole of Finland has suffered from this through the weaker growth of the national economy.
Therefore, the State started to demand more residential zoning in MAL agreements in return for rail investments a decade ago. In recent years, precisely the traffic investments in the Helsinki region have enabled the increase of plot reserve. The ring rail line raised the residential production in Vantaa to a higher level, and the tram line investment will leverage the housing production in the future. The Jokeri Light Rail and the Kruunuvuori light rail lines as well as the other internal tram projects in the city would further increase the residential production in Helsinki.
In addition, the Government decision to launch the Espoo Urban Line enables the construction of more than 25,000 apartments along the rails. Tampere Tramway will increase the residential production along the rails and further strengthen the appeal of the city.
Investments in public transport are the most effective way to increase residential construction. Great location near public transport connections launches residential construction by the private sector without State funding.
The Government is currently preparing the 8-year housing policy programme, and it is important that it will adhere to the smart MAL policy. The State should avoid the temptation to add new targets to the MAL agreements, such as requirements concerning the area of the apartment or apartment distribution or greater targets concerning the number of ARA apartments.
The State control must mainly focus on two points: 1) to increase the level of ambition of the municipalities’ apartment production targets through diversity of supply and 2) to create a sustainable urban structure in which major part of the apartments are placed in central areas, close to stations and along public transport routes.
The market-based housing production is responsible for three quarters of the residential construction, which means that it practically sets the price level for apartments and rents. Increasing the ARA targets would mean an increase in the price of housing since the other residents will end up being the payers of the lower plot price. When there is a lack of plots, each plot designated for the ARA production is one plot less in market-based production, which again increases the housing prices. Therefore, the 8-year housing policy programme must concentrate on the measures that will improve the prerequisites for apartment production.
Kojamo Sustainability Programme
Kojamo launched its sustainability programme on 2 December 2020, which is based on Kojamo’s strategy and vision of creating better urban housing. With its sustainability programme, Kojamo commits to complying with the UN Sustainable Development Goals and aims to use carbon-neutral energy in its properties by 2030. Read more: https://kojamo.fi/en/sustainability/kojamo-sustainability-programme/
GRESB Sustainability Assessment Result
Kojamo received a good result and earned a Green Star designation from its first GRESB Sustainability Assessment. Read more: https://kojamo.fi/en/news-releases/kojamo-earned-a-green-star-designation-in-its-first-gresb-sustainability-assessment/