Tuesday 13 November 2007

Aktia Bank view in 2004...


Finland's stellar housing prices poised to fall -Aktia

"Rising interest rates will next year lead to a decrease in Finland's astronomical housing prices, says an Aktia Bank economic outlook, released on Monday 20 Sept. 2004."

"As housing loan interest rates rise, the quantity of money moving about in housing markets decreases, sale times lengthen and sellers have to cut asking prices. First the housing price increase will peter out and then prices will turn to the descent next year," says Aktia chief economist Timo Tyrväinen.

"A housing price crash is however not in the cards, but the downward check will probably remain in the 5-10 per cent range - slightly more in the capital region", Mr Tyrväinen added.

That was back in 2004...
What is the situation now? price have risen in a frentic way, almost 20%-40% during that period. I guess Central bankers have been astonished by the unprecedented housing price rise. No wonder, after the stock market crash of 2001, money was redirected in "hard" assets, out of stocks; thus inflating and distorting the housing price growth.

source: Aktia

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