Friday, 14 December 2007
Finnish Housing Prices Declining
"Prices for detached homes declined in the third quarter, Statistics Finland reported on Friday. Meanwhile the overall inflation rate was 2.9 per cent in November."
"In the July-to-September period, house prices came down by 2.8 percent on average compared with the second quarter of this year."
"However the average cost of single homes remains four percent higher than last year overall. In the Helsinki region, prices in the third quarter were 6.4 percent higher than a year earlier. Elsewhere they rose by 3.7 percent in a year."
"The cost of vacant lots for detached houses climbed more sharply, up 8.3 percent in a year. However they were 2.3 percent lower than in the spring quarter."
I can tell you that in "average" prices have come much more than the 3% reported. I have been examining prices of flat in some key area in the past 6 month and prices have already been lowered by 10% albeit there were set at an unrealistically high level.
Remember the economy is still holding, unemployment is low and yet prices are down. This is an unusual phenomenon that just show how stretch prices have been.
I expect prices to deteriorate from October to December and this will accelerate in the first half of 2008. The main reason is due to the high level of borrowing cost, tightening of credit standard and most important the buyer and seller psychology is changing.