OECD Economics Department Working Papers
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.
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
- ISSN: 18151973 (online)
- https://doi.org/10.1787/18151973
Finland's Housing Market
Reducing Risks and Improving Policies
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.
Keywords: mortgages, housing wealth, social housing, house prices, housing support, property tax
JEL:
E2: Macroeconomics and Monetary Economics / Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy;
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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