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Finland's Housing Market: Reducing Risks and Improving Policies


  • Laura Vartia



While pronounced cycles in house prices have been a major cause of macroeconomic instability in the past, current house price developments do not yet suggest an overheating of the housing market. However, several important concerns are related to both direct effects of housing markets on overall activity and to more structural and regional issues. A factor making housing markets and the macro economy vulnerable to interestrate shocks is the high share of mortgage loans linked to variable interest rates. Tax subsidies to housing may largely be capitalised in higher land prices rather than increasing housing availability to the extent that slow planning procedures and municipalities' unwillingness to provide building land have limited the growth of the housing stock in growth regions. This would argue for improving municipalities' incentives to provide building land, speeding up planning procedures and a phased removal of the tax advantage associated with housing. Furthermore, the provision of social housing and the housing allowance system should be better targeted on those most in need of affordable housing. Le marché du logement en Finlande : réduire les risques et améliorer les politiques Si, par le passé, les cycles marqués qu'ont connus les prix des logements ont été un facteur majeur d'instabilité économique, l'évolution actuelle des prix des logements ne donne pas encore à penser qu'il y a surchauffe sur ce marché. Toutefois, les effets directs des marchés du logement sur l'activité globale et des problèmes plus structurels et plus régionaux sont des sujets de préoccupation importants. L'un des facteurs de la vulnérabilité des marchés du logement et de la macroéconomie aux chocs de taux d'intérêt est la part importante des prêts hypothécaires à taux d'intérêt variable. Les aides fiscales au logement peuvent être largement capitalisées dans la hausse des prix des terrains au lieu d'accroître le nombre de logements disponibles dans la mesure où la lenteur des procédures de planification et la réticence des communes à offrir des terrains constructibles ont limité la croissance du parc de logements dans les régions en expansion. Cela plaide en faveur de politiques visant à inciter davantage les communes à offrir des terrains à bâtir, à accélérer les procédures de planification et à supprimer progressivement l'avantage fiscal dont bénéficie le logement. En outre, l'offre de logements sociaux et le régime de l'allocation logement devraient être davantage ciblés sur les personnes ayant le plus de besoin de logements à un prix abordable.

Suggested Citation

  • Laura Vartia, 2006. "Finland's Housing Market: Reducing Risks and Improving Policies," OECD Economics Department Working Papers 514, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:514-en

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    References listed on IDEAS

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    Cited by:

    1. Karen M. Gibler & Tanja Tyvimaa, 2014. "The Potential for Consumer Segmentation in the Finnish Housing Market," Journal of Consumer Affairs, Wiley Blackwell, vol. 48(2), pages 351-379, June.

    More about this item


    aides au logement; emprunts hypothécaires; house prices; housing support; housing wealth; impôt sur la propriété; logement social; mortgages; prix des logements; property tax; richesse; social housing;

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets


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