Finnish Housing System in the spotlight

International recognition of success in being the only country to bring down homelessness is breathing new life into Finland’s housing scene however it is also putting the broader housing market in the spotlight. Helsinki, like most major cities, has a shortage of affordable housing and the shift in government spending from supporting construction to supporting people to pay rents in the private sector is proving costly for Finnish government.

The bill for housing allowance is set to hit 2 billion €, a significant amount for a country with a population of just under 5.5 million. KOVA is Housing Europe’s members in Finland representing the non-for-profit housing sector welcomes the fact that severe housing deprivation and homelessness are among the lowest in Europe but warns that over-reliance on the market in meeting middle-income demand is taking its toll. Flats being produced by private developers are becoming smaller in size. This is partly a result of changing demand and an increase in smaller households however the fact remains as Jouni Parkkonen, KOVA’s director puts it: ‘Noone wants to live in a box’. The resulting smaller sizes are not being reflected by smaller prices and “Helsinki as a city is missing out as people are being excluded because of rising housing prices” added Jouni. The reality of the growing gap between Helsinki and the rest of the country is in contrast to the stated aims of the Finnish ministry housing plan which commits to ‘ensuring a socially and regionally balanced housing market’.

These trends are by no means an exception. The OECD has warned that rising house prices risk to eventually push large segments of the population out of cities. Eurostat findings show that 80% of people struggle to find affordable accommodation in major European cities, such as London, Paris, Berlin, Hamburg, Vienna, Munich, Stockholm, and Oslo (Eurostat 2016). Likewise, with regards the trend to reduce funding for housing production. In the EU, total expenditure on housing development has declined by 44%, from 48.2bn in 2009 to 27.5bn Euros in 2015.  Over the same time period, expenditure on housing allowance in the EU has increased from 54.5bn to 80.8bn Euros.

Following my presentation of Housing Europe and our main activities which informed participants on how Finland compares with other countries across the region, I had a chance to talk to some of the participants.

Hanna, an architect employed by the city of Helsinki was very pleased to hear about the international success on tackling homelessness but also on scoring highest on a quality rating by Eurofound by people living in social housing. She explained that Finns are not aiming at being the best and usually doing just OK is enough. She, however, warned that housing policy is not keeping up with changing needs. Finland is losing many well-paid jobs while rents are rising. She feels that the city is not acting quickly enough to address the mismatch and has the impression that many cities do not see housing as their responsibility.

Kimmo, CEO of Helsinki-based social housing provider tell me of a new multi-generational housing development ‘Generation Block’ and explains that his vision for our sector is that of providing not housing but living as a service and the need for a holistic approach to answer the communities needs at an affordable price.

Social mix in Housing is a central and much valued pillar of Finnish housing policy and this was re-enforced by the minister’s announcement at the conference, warmly welcomed by KOVA and triggering a round of applause from the 400 or so participants, that the temporary move to introduce an income limit to access to social housing was to be abandoned one year after its introduction. Jouni explained that this was recognition that housing provision is to be based on need, not on income.

There are still no clear answers on the table on how to increase the supply of affordable homes but the recognition that something needs to change in view of the growing housing allowance bill is definitely clear. Let’s see if the political will to radically change the approach to homelessness will now extend to addressing the growing affordability gap. Europe is watching closely for much-needed inspiration and Housing Europe is happy to be part of this new conversation.