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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
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Housing Price and Investment Dynamics in Finland
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- Christophe André1, Clara García1
- Author Affiliations
- 1: OECD, France
- 23 May 2012
- Bibliographic information
The Finnish housing market is volatile. After declining significantly as the global financial crisis unfolded, housing prices and investment recovered to reach new peaks. This paper uses a small econometric model to assess the role of fundamentals in housing price and investment developments. Current housing valuations and residential investment are broadly in line with the model estimates. Housing market volatility is exacerbated by fluctuations in the wider economy, which given its size and openness is vulnerable to external shocks. Structural features of the housing market also make it prone to volatility. The paper describes institutional characteristics of the Finnish housing market that bear on house price volatility and supply responsiveness. These relate to the structure of tenures, housing taxation and subsidies, social housing, financing, land-use planning, and competition in the construction industry.
- household wealth, construction, property taxation, housing prices, Finland, housing market, housing policies, mortgage markets, land-use planning
- JEL Classification:
- E21: Macroeconomics and Monetary Economics / Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy / Consumption ; Saving ; Wealth
- G21: Financial Economics / Financial Institutions and Services / Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages
- H24: Public Economics / Taxation, Subsidies, and Revenue / Personal Income and Other Nonbusiness Taxes and Subsidies
- L74: Industrial Organization / Industry Studies: Primary Products and Construction / Construction
- R21: Urban, Rural, Regional, Real Estate, and Transportation Economics / Household Analysis / Housing Demand
- R31: Urban, Rural, Regional, Real Estate, and Transportation Economics / Real Estate Markets, Spatial Production Analysis, and Firm Location / Housing Supply and Markets
- R38: Urban, Rural, Regional, Real Estate, and Transportation Economics / Real Estate Markets, Spatial Production Analysis, and Firm Location / Government Policy
- R52: Urban, Rural, Regional, Real Estate, and Transportation Economics / Regional Government Analysis / Land Use and Other Regulations