Aktia's Chief Economist: The development of the rental market for one-room flats in Finnish provinces is unsustainable

Aktia's Chief Economist: The development of the rental market for one-room flats in Finnish provinces is unsustainable

The restrictions that followed the coronavirus and the general economic uncertainty have had a strong impact on the economy in 2020. Momentary decline in the housing market has recovered rapidly during the summer and autumn. On the rental market, the strong development has continued for a longer period.

Aktia’s Chief Economist Lasse Corin says, in a report published today, that the development of the rental market for one- room flats in Finnish provinces is unsustainable and does not follow the growth of the population in the regions. The vitality of an area can be measured by its demographic development and therefore, one could think that this would be reflected both in housing prices and the rental level in the area. Housing prices seem to follow this assumption, but Corin pays special attention in his report on the rental level of one- room flats in emigration municipalities. "An interesting finding was that while one-room flats in declining areas follow the general cost trend of other homes, this seems not to apply to the rental development. In other words, even with a declining population, rents for one-room flats are increasing”, says Lasse Corin.

According to Corin, possible changes in the Finnish housing benefit system might have an impact on this development. Through this system, rental housing is supported by more than € 2 billion each year, and reforms to the housing benefit system may become relevant when rebalancing measures are considered. For property investors, the constant rise in rents offers attractive investment targets, but there is an exceptional risk involved.

Further information and interview requests:
Katja Korsinkin, Communications Manager, tel. +358 50 411 3036, katja.korsinkin@aktia.fi

Aktia is a Finnish asset manager, bank and life insurer that has been creating wealth and wellbeing from one generation to the next for 200 years. We serve our customers in digital channels everywhere and face-to-face in our offices in the Helsinki, Turku, Tampere, Vaasa and Oulu regions. Our award-winning asset management business sells investment funds internationally. We employ approximately 750 people around Finland. Aktia's assets under management (AuM) on 31 December 2019 amounted to EUR 9.9 billion, and the balance sheet total was EUR 9.7 billion. Aktia's shares are listed on Nasdaq Helsinki Ltd (AKTIA). aktia.com.

Attachment

• Aktia_housingmarketoverview_2020