Tag Archives: housing policy

Is the Helsinki housing market like the Dutch housing market?

I am wondering about that. I am not an expert on housing policies, and only to some extent are tax rules on deduction of interest in mortgage similar in Finland and the Netherlands, but consider these similarities:

– space constrained: the Netherlands is a small country in which physical space is very much constrained for building real estate, in particular in the West. Helsinki is similarly space constrained: on one side is the sea, on the other sides there are other municipalities. As in the Netherlands, Helsinki has a few areas of nature which the locals value very much for their intrinsic value and recreation, which leads to resistance to their ‘development’ (see here).

– Helsinki experiences an influx of people from elsewhere in the country (see the last graph in this post), much like the West of the Netherlands (by and large)

– Helsinki, like parts of many cities in the Netherlands, has especially in the inner city lots of buildings which are especially valued for their location, style or age (think pre-1960s flats and especially the 1930s Jugendstil buildings). Many of these are, in addition to normal residental use, in use by companies, which pushes their value up, I guess.

 

One of the problems in Helsinki, which is incidentally also the big problem in the Netherlands, is that there are not enough suitable houses/apartments for so-called starters, i.e. first-time buyers (young people). Or put in another way – there are too few of them or they are simply too expensive. Because of the space constraints new such residencies are built in locations where young people may not necessarily want to to live as a first choice (i.e. far from the center).

 

Taking into account that the Netherlands and Finland (/Helsinki) are experiencing housing bubbles (which are now deflating in all likelihood, at least in the Netherlands), what would be sensible steps to make the housing markets in the Netherlands and Helsinki work better?

Something else: the Dutch economy and a possible housing bubble deflating?

As I am Dutch, i do follow the Dutch news to some extent. I found some news that kind of confirmed that things are not so well in one of the ‘core’ core eurozone countries:

The other Dutch disease Although this is already a month old it seems that the Dutch economy is hit harder by the eurocrisis than the German economy.

Dutch show how not to run housing policy And this is one of the reasons why. Now, since 2011 housing prices have dramatically declined, but thanks to the earlier problems of the Dutch financial sector, the banking sector is now simply stuck – banks don’t lend money, so people can’t buy, which means it is impossible to sell, which makes it a problem that people have expensive mortgages from the time of rising housing prices.

Also exports and imports through Rotterdam are not as big as previously, and as a whole, the Netherlands is quite sensitive to changes in the European economic tide. On top of that are issues like transport (traffic jams).

I don’t know if the Netherlands will lose its AAA-status but it nonetheless starts to feel uncomfortable for the current government that they aligned themselves with Merkel’s economic policy and wholly supported the new Fiscal Compact.