Tampere faces housing shortage as construction halts, warns Mayor Kalervo Kummola

Tampere is facing a housing shortage in the next year to year and a half, according to Mayor Kalervo Kummola. He notes that the construction of privately funded housing has essentially come to a halt, while the development of government-subsidized ARA housing is also decreasing. The construction industry and economists, in a report by Helsingin Sanomat, estimate that unsold properties may be sold before new units are completed.

Kummola empathizes with construction companies that have their assets tied up in unsold homes, blaming banks for not being flexible. “This is a dire situation when banks are not willing to make any concessions. I think the banks are to blame for this situation because they are not taking any risks,” he states. He suggests that the government collaborates with banks and insurance companies to create a buffer during downturns. “If we can launch new projects by next spring in the private sector, we might avoid a severe housing shortage.”

Veli-Matti Mattila, the chief economist of the finance sector, responds to Kummola’s criticism by saying that banks prioritize the customers’ repayment capabilities. If this is insufficient, banks cannot approve loans for construction. He emphasizes that banks are responding to the situation according to regulatory expectations.

Construction production is set to decline throughout this year, as reported by Rakennusteollisuus RT. However, Mayor Kummola believes that the current downturn will lead to a construction boom, predicting that building costs could rise by 30-40%.

The city of Tampere is also experiencing population growth, with an anticipated increase of 18% by 2040, which poses additional pressure on the housing market and calls for urgent action from local authorities.