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finland

Succeed with your quest to find an affordable rental in Helsinki

An affordable rental in Helsinki? It sounds like an oxymoron to anyone who is familiar with the expensive nature of apartments and houses in this Nordic capital. Does it exist?

The bad news is that rents keep rising in Helsinki. Currently, the average monthly rent in Helsinki is €22.1 per m² meaning that a 30m² studio apartment costs on average €663 per month. If you want to live in a trendy area of the city centre you can end up paying more than €1,000 for a studio when renting through the private market.

Below are recent search results on the popular rental listing site Vuokraovi for studio apartments in Kamppi (city centre):

As you can see, Helsinki is an expensive city. There’s a huge demand for property, and there’s not enough of it.

Here are some options to consider if you want to live in Finland’s capital.

HEKA

Helsinki Council Housing (HEKA) offers the least expensive per square meter price in comparison to any other rental provider. For an apartment in the central Kamppi area you’ll pay around €12.62 per m² per month, less than half the price than that of the private market in that same location.

For people outside of Finland, Council Housing might sound like a curse word since state-provided affordable houses often have a bad reputation. In Helsinki, this is not the case. Council houses are generally well maintained and there are many newly built council houses in the city. Among these is Woodcity, which finished building two council housing apartment buildings in Jätkäsaari in early 2019. 

On the downside, council houses in Helsinki are in huge demand and hard to get. The council housing system is based on the level of urgency. They have three categories listed on their website: Extremely Urgent, Urgent and Not Urgent. You can read more about the categories here

If you are willing to move a bit outside the city centre the likelihood of getting a place through HEKA increases, but these houses are still in high demand. Many people apply for years without luck. However, it is still worth the try. 

So how to apply? If you have Finnish online banking you can fill in an application for council housing here. Apply here if you don’t have online banking yet.  

M2-kodit

Another inexpensive housing provider is M2-kodit. In their own words, they provide “the most generous square meters in the city”. M2-Kodit operates under the Y-Foundation which aims to increase equality by providing affordable housing in big cities around Finland.

The problem with M2-Kodit is the same as with council housing: the demand is huge and getting one of their apartments is difficult. The apartments are given out based on need and the value of applicant’s assets cannot be above a certain threshold.

The application is valid for three months. After that, you need to renew it if you are still searching for a place to live. You can fill in an application here. You will need a Finnish Social Security number to apply. 

Colliers Finland

Some state subsidized housing is rented through Colliers Finland. These apartments have a substantially lower rent than the private market but also different criteria when it comes to selecting tenants.

For example, there is a limit on assets and also your need for housing is evaluated during the application process. If you are interested in applying you can do it here. You will need a Finnish Social Security number to apply. 

HASO or other right-of-occupancy housing

Even cheaper than HEKA are the right-of-occupancy apartments and houses, AKA HASOs. The vastike – basically the equivalent of a rent – varies. For the newly built one bedroom HASO apartments in Kalasatama (very central) that are scheduled to be completed in 2021 the monthly vastike is estimated to be around €550. Amazing!

You will have the right to live in the house for life if you wish, unless you breach the terms of the housing contract.

The challenge with HASO houses and apartments is that you will need to get a loan from a Finnish bank or have about €50k in cash to pay for the right-of-occupancy in a central Helsinki location. You will get the money back once you move out so you won’t lose the money. But still, Finnish banks are very strict when it comes to offering loans for HASO residences despite the nearly non-existing risks.

The other issue is that if you are looking to get a right-of-occupancy inside of Helsinki, the line is huge and the likelihood of getting one depends on your number.

Yes, you’ll have to get in line.

The housing application process is based on a queuing system. You can apply for a number here. For the most popular locations (close to the city centre) you are very unlikely to get any offers unless your number is close to 20 years old! However, if you are willing to move outside the city centre or even, God forbid, to Vantaa or Espoo, you can get offers with a number that is even less than a year old.

Find right-of-occupancy houses and apartments from these websites: Haso, TA and Avainasunnot.

Private market rentals

Private market apartments in Helsinki.

Have some money and need a place to live right now? You can find rental apartments from the private market by searching Vuokraovi, Oikotie and Tori.fi

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Categories
finland

Big cities in Finland are growing even as the countryside empties – at least we pay our mortgages (unlike the Swedes)

Finland’s capital city Helsinki attracts more than just tourists. Don’t get me wrong: tourists are great and without them, we would not have anyone to brag to about Finnish sauna or our achievements in ice hockey. Jokes aside. The metropolitan area of Helsinki, which includes Espoo and Vantaa, has around 1.5 million inhabitants. In Helsinki city alone, there are 650,000 people, and the number is growing. Pressure on Finland’s real estate market is mounting.

Helsinki Finland Apartments
Jätkäsaari, Helsinki, Finland.

Real estate market in Finland

Finland’s real estate market is a double-edged sword. Big cities (especially those with universities) are growing as the countryside empties. However, house prices grew in only three major city regions last year: Helsinki, Turku and Tampere. These are all cities located in Finland’s south. House prices in Helsinki are expected to rise by 2% in 2019 and by 1.5% in 2020. At the same time, half of the homes in Finland depreciated in value.

Housing real estate Helsinki Finland
Jätkäsaari, Helsinki, Finland.

Urbanization is a global trend and Finland is no exception. As the country’s fertility rate falls to an all-time low, Finns don’t need that big house with a big yard by the lake anymore.

Instead, nowadays many Finns, especially younger people, appreciate a good location close to the city centre. Owning a car is seen as an unnecessary option for many. Why pay for a car when you can use great public transport or pure muscle energy to commute while at the same time you are saving the planet? That would be a great question to ask of Americans!

Not everyone in Finland is happy with this kind of development. The Centre Party of Finland (in Finnish: Keskusta) supports agrarianism. They would like to “keep the whole Finland alive” by supporting rural areas so that people would have work options and services outside of big cities. However, Keskusta suffered a great loss in Finland’s last parliamentary elections (2019). Urbanization is not the only reason for the loss, but it definitely played a role.

Real estate market in other Nordic Countries

Finland is a Nordic country, and we like to compare ourselves to other Nordic countries, especially Sweden, our brother and great rival. Nordic countries are similar in many ways (Not discussing the Finnish language here…), but there are also some differences.

In Sweden, housing prices have gone through the roof, especially in the capital city, Stockholm. There were definitely signs of a housing bubble: house prices went up by 44% in the past 6 years. However, compared to 2018 Q1, house prices in Sweden went down by 2.09% in 2019 Q1.

From the two-year-old graph above we can see that house prices have stayed stagnant in Finland during the last 5 years. In Denmark, Norway and especially Sweden, house prices have risen a lot. One reason why Finland has not been able to keep up with its Nordic neighbours is that the economic situation in Finland was quite bad after the 2008 global financial crisis and the following European debt crisis. After 2011, Finland recovered very slowly from these crises compared to rest of the world. Finally after 2015, the economy of Finland started to recover.

Punavuori, Helsinki, Finland.

Nordic countries have different mortgage loan policies

There is one big reason why the house prices surged so much in Sweden before 2019. Sweden has a totally different mortgage system compared to Finland. In Finland, the longest mortgage term is now 45 years. However, mortgages longer than 30-years are rare in Finland. In Sweden, the longest mortgage term is 125 years! That is a huge difference and is the biggest reason why house prices are out of control especially in Sweden’s big cities.

Stockholm Sweden Real Estate New Housing
‎⁨Hammarbyhamnen⁩, ⁨Stockholm⁩, ⁨Sweden⁩.

Swedes do not necessarily pay the loan payments of their mortgages, because their mortgage policies and laws allow that. Instead, they might only pay the loan’s interest. This allows them to spend and invest more money, but it can (and probably will) lead to a housing bubble burst some day. Norway and Denmark are in the middle: people in these countries don’t pay their mortgages as fast as in Finland, but definitely faster than in Sweden.

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.