Finland’s first apartment building rises in Kello village as housing construction collapses

Finland will start construction on just 15,000 new homes this year—the lowest figure since the 1950s—yet one small community near Oulu is defying the trend, reports Yle.

The village of Kello, now a district of Oulu, is building its first-ever apartment block, a three- and four-storey complex with 25 units. The project, financed entirely at the developers’ own risk, targets older residents who want to downsize from single-family homes but remain in the area.

“Many in Kello are aging and can no longer maintain their houses,” said Jukka Puolakka, one of the three developer-entrepreneurs behind the project. “They were born here and don’t want to move to nearby Haukipudas. Interest has been strong.”

Planning began in 2014, with six years of zoning negotiations and 14 draft versions before approval. The low-rise design—three to four storeys—was chosen to fit the rural setting. Construction started last spring when costs were at their lowest, saving around €400 per square meter compared to 2021.

National construction slump deepens Nationwide, Finland’s housing production has contracted for four consecutive years, hitting a 70-year low. Only 16,900 new homes were completed last year, with this year’s and next year’s output projected at 15,000 annually.

“Profitability in market-rate housing is broken,” said Jouni Vihmo, chief economist at Rakennusteollisuus RT. “No builder, investor, or bank can make it work.” High costs, low returns, and tight regulation have stalled projects, while financing has become a major hurdle.

In Oulu, the slowdown mirrors the national trend. “We’re largely on hold,” said Juha Mäntynen, regional director for the construction industry. While residential building is stagnant, infrastructure and data center projects remain active. Large developments like the Oulu Arena district, Raksila swimming hall, and railway station area are pending tenders, with the pool set to break ground this year.

The downturn has cut construction employment, which peaked at 182,000 this year but is forecast to drop to 178,000 by 2027. “Only a well-built country thrives,” warned Aleksi Randell, CEO of Rakennusteollisuus RT, citing lost tax revenue and eroding confidence as values decline.