"There are further signs of a slump in the Estonian housing market as last year figures showed that sales of homes have sharply slowdown."
"This year the trend will continue with a possibility of recession in the shadow. Some people are already struggling to meet their mortgage payment and the number of repossession is on the rise."
"House price have been declining and according to a local economical newspaper, the situation will still continue through 2008 and 2009."
Source : Kauppalehti
Related: Baltics, the trigger?
2 comments:
I saw some interesting disussion over at housepricecrash.co.uk, which talked of the Latvian/Lithuanian housing market. They suggested that foreign (West European) speculators had helped pump the housing bubbles in the East. Do you know much about this?
Worst is, I don't know how true it is, but some say they took mortgages in Swiss francs to buy houses/flats in e.g. Latvia. Just imagine having a Swiss franc denominated mortgage for a deflating house in Latvia whilst being paid in British pounds (the pound IMHO has been overvalued in recent years and now we see it drop).
nov
I know that there are reader from Estonia, it will be nice to hear from them...
What you are describing in fact is a form of "Carry Trade". The most famous one being the "Yen carry trade" where people have borrowed in low interest rate currency (The yen) and invested in higher interest rate currency (dollar, Euro), in the way propulsing stock market in the past few years...Now it's unwinding...
The swiss carry is the same phenomenon. It's a dangerous bet and was warned by Mervin King in one of its press conference with regard to Britons investing in the eastern country as there is clearly a risk in foreign exchange fluctuation as well as slump in housing price...
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