Durable housing model in Finland: Population and housing price change from 2010 to 2020

Abstract

This thesis studies the relationship between population changes and housing prices in ten Finnish municipalities from 2010 to 2020. Using the durable housing model as our basis, we hypothesise based on previous research that housing prices are more sensitive to population decline than population gain. This is due to housing supply being elastic when demand grows, but inelastic when demand drops.

The thesis looks at the population and price changes on a 1km-by-1km level and find that on the decadal level prices rise by 0.16 percentage points per each percent increase in population, while prices drop by 0.69 percentage points per each percent decrease in population, which is in line with previous research and the theoretical hypothesis.

Contrary to previous studies, this study allows for intra-city price and population changes, and we find that we can see the effect of durable housing within growing municipalities in Finland, namely Helsinki, Vantaa, Espoo, and Tam-pere. This is a novel finding, as previous research has looked on city and prefecture level data.

Policymakers on a national level should consider the polarizing effects that decreasing populations and housing prices have, while city officials in growth cities should also consider the effects of durable housing within their policymaking.