An adult and child cycling in Helsinki on 31 August 2024. Helsinki is Finland’s only municipality to hold a double-A credit rating from the Mortgage Society of Finland (Hypo). Hypo on 17 October revealed that it has pegged down its ratings for Espoo and Tampere from AA- to A+. (Roni Rekomaa – Lehtikuva)
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THE CITIES of Espoo and Tampere have been stripped of their double-A credit ratings by the Mortgage Society of Finland (Hypo).
Helsinki is therefore the only municipality to hold an AA- rating from the housing-focused credit institution, leading a group of A-rated municipalities that has shrunk by six from the previous year to 15.
Hypo on 17 October revealed that it has issued an A+ rating to Espoo, Pirkkala and Tampere, an A rating to Kempele, Kirkkonummi, Lempäälä, Oulu and Turku, and an A- rating to Kangasala, Kauniainen, Naantali, Nurmijärvi, Vantaa and Ylöjärvi. Another 120 municipalities were issued a rating starting with a B and 81 a rating starting with a C.
The ratings were upgraded by a notch for 49 regions and downgraded by a notch for 49 regions.
Tampere saw its rating downgraded primarily due to its fairly narrow industrial make-up – namely, its high reliance on manufacturing. Municipalities in the capital region have a more diverse industrial make-up, including a larger service sector, that provides greater protection from swings in the macroeconomic environment.
“Unemployed job seekers account for a larger share of the workforce in Tampere and Turku than in the capital region,” Hypo observed in its report.
Overall, the rating adjustments were attributed to risks arising from waning demand from real estate investors in the largest cities, the challenging economic environment and the growing likelihood of a credit-rating downgrade for Finland.
“The significance of micro-location becomes more pronounced as rapid growth creates challenges for urban development. Simultaneously, intensifying internal migration, made possible by the plentiful supply of housing, reduces demand for housing in regions faced with migration losses,” wrote Hypo.
The ratings reflect its assessment of the risks and outlook associated with regional housing markets across Finland. The assessment incorporates all municipalities in the country, as well as postal code areas in Greater Helsinki, Tampere and Turku.
“Housing markets vary considerably also within vital municipalities. The BB-rated regions found within the largest A-rated growth centres are typically located in the peripheries of the urban region and are less accessible by transport or afflicted by segregation.”
In Helsinki, a rating was issued to 81 postal code areas, 21 of which received the highest triple-A rating. Along with areas that consistently perform well, such as Kalasatama, Lauttasaari and Pasila, the list includes areas with a standout quality, such as proximity to the Baltic Sea for Jollas, high energy efficiency for Keski-Herttoniemi, rapid growth rate for Kruununvuorenranta and high share of home owners for Paloheinä.
Pohjois-Vuosaari received the lowest rating, BB, in Helsinki.
An AAA rating was also bestowed on seven postal code areas in Espoo, two areas in Tampere and one area in Vantaa.
Aleksi Teivainen – HT
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Source: www.helsinkitimes.fi
