Friday, 12 September 2008

Have You heard or See Something Interesting?

if you think that an "article" should be on the spotlight or if you have some pieces of evidence showing an exuberant housing market where fundamentals are out of touch... just put it as a comment...


Anonymous said...

Anonymous said...

A sign of crazy bet:

Anonymous said...

The data appear to confirm suspicions that the EU authorities have carried out a covert rescue of the Spanish mortgage banking system.

Anonymous said...

Housing - transport - Finnish politics:


Anton said...

U.K. Nationwide House Prices Fall for a Third Month :

Collin said...

The Federal Open Market Committee (FOMC) of the US Federal Reserve has announced a cut of 0.50% in the key federal funds interest rate to 3.% - that is a reduction of 1.25% in just over a week - - the most rapid decline in the rate since 1989.

Anonymous said...

Got £150 000 (over €200 000) for "a delapidated shed in Wales"?


Anonymous said...

Rents in Finland are still rising (3% in 2007)


Worried said...

What Island crow says about rents seems to be true.

We are renting here in Tuusula and expecting a baby and we are pretty desparate to get a place of our own where we dont have to listen to somebody else tramping around on top of our heads at night:-(

From our point of view pressure to buy a house is exstreme!!!

Meanwhile elsewhere in the world there are plenty of signals that now is not a good time to buy but we are only human!

Anton said...

Don't worry be happy!

Renting to the bank or renting to a landlord is the same thing.

At the end, you prefer to live your life now and not in 20 years or so.

People will work hard a third of their life, under pressure and stress especially in nowdays.

Finland is not very well positioned to deal with any crisis. If such a recession happen it can quite easely be in the scale of the one in the 1990's considering the level of debt, the worse financial crisis that the world is witnessing.

To my knowledge, people with high debt have already started to cut into the strict minimum. Some are thinking as it will be temporary, well 15, 20 years won't be.

To Finnish: Renting won't be soaring , it's a simple demand/offer equation. If the offer is too high, the demand will vanish: people will live in cheaper area or cities. Student will start sharing rooms and demand for social flat will soar.

So my guess will be that we are about to enter an era of deflation where asset prices (housing, land, rent etc..) will fall for a long long period.


Worried said...

>>Renting to the bank or renting to a landlord is the same thing.

Hopefully we can avoid 'renting to the bank'.

Finland is looking very vulnerable now. But even so right now today it is not easy to find accommodation in the Helsinki area if you dont want to spend your savings on housing on a rental basis.

I have seen a few properties and i can see that prices are coming down.

Meanwhile life goes on. When does the bottom arrive? 5 years?

Long wait if so!

Anton said...

5 years a bottom...i think price will decline for about 10 to 20 years as did the japanese housing market since the late 80's.

Similarities between Finland and Japan are on the ageing side. Indeed Finland is battling in the same front: More retirees than active. If immigration is not kicking off and if surrounding country keep on booming then dark cloud are on the horizon...


Worried said...


Who is more worried here?

I chose the name 'worried' before this whole "subprime" thing blew up.

I suppose GD2 is possible.

The trend elsewhere is that prices are correcting much more quickly than historic norms. After all in the old days we only knew what we were told to believe. For now we can find out for ourselves so price realities are coming quicker perhaps?

No way am i going to be waiting more than 5 years to buy here in Finland. But i do have options to buy in other countries if they adjust there.

Can you say why you are so gloomy?

There is a shortage of housing worldwide or so it seems to me. Yes prices will adjust of course and could be flat for a while but do you really expect slow grinds down for 15 or more years??

I am interested in how you arrive at that assessment

Anton said...

I'm not worried, far from it. I think i'm just realistic, and maybe a little bit more informed than "the mass".

The U.S. price have corrected not because people are better informed (if they were so , I don't think they would have purchased assets that were clearly overvalued) but because institutions have lended in search of quick profit in a fraudulent environment...

There have been a construction binge due to a world wide low interest rates in the past 10 years
pushing affordability artificially high, and this in a begnin inflationanry environment. -This has changed-

In many country housing has started (U.S,U.K, Ireland, Spain, France...), make no mistake, Finland will follow and history has shown that correction is more violent than in any other European or Nordic country.

Why the correction will be more pronouced?
- Massive variable rate mortgage lending (98%)
- as stated in this blog, land reform not passed so lots of speculation in this area
- Neighbourg countries are getting weaker, Russia is battling with an overheated economy (inflation is at 11%! ,so a hard landing is inevitable)
- Baltics is slowing very fast, which represent the bulk of the finnish economy

The ingredient and impact are pretty similar to the 90's if not worse as at that time U.S, U.K and emerging market recovered very quickly in the beginning of the 90's to rescue the world economy slumps.

This time it's different, China, Russia, India and any emerging market is battling with a raging inflation thus pushing the risk that they will have a hard landing.

Remember that GDP from last year to this one has already halved coming from a peak of 5%. Inflation has almost doubled... while salary in real term have stagnated (adjusted to inflation).

So no doubt that housing will correct, but it seems that our politicians will do everything in order to not allow the adjustement to happen quickly (dragging their feet on reforms) thus falling in the same trap as Japan...

So why buying an asset that will lose value over time? I think it's all about psychology and conditioning, after all we have had a 15 years boom, for some it's all they have mind will change slowly but surely.

I could carry on for hours but I think the wise will be carefull to take any further debt at this stage of the cycle as we won't be in a 70's situation (we won't have negative real interest rates as during that period leaded by incompetent or unknowledgeable central bankers)!

Anonymous said...


I am not saying you are wrong here but you seem to be conflicted.

You say:

"make no mistake, Finland will follow and history has shown that correction is more violent than in any other European or Nordic country."

But then say.

"it seems that our politicians will do everything in order to not allow the adjustement to happen quickly "

And it seems you have faith in politicians now but see no reasons for faith earlier!

"we won't be in a 70's situation (we won't have negative real interest rates as during that period leaded by incompetent or unknowledgeable central bankers)"

Surely we already have negative real interest rates?

Anton said...

I'm saying that if politicians were to slow the process the correction will slow but will still happen and the consequences could be more dramatic (that's socialist approach versus capitalit or liberal one). So i don't see any conflict.

On average Real interest are not negative. Many banks are now offering over 5% interest rates on deposit , fixed income is over 4% so you are still protected against inflation.

Inflation will be good to debt holder if you will have spiraling wage...But today world is different than the 70's, it can be put in two words: Globalization and cheap labour.

So company will close their door and relocalize somewhere else if salary cost were too high.

Actually in the 70's the wood industry were seeing soaring wages, today you are witnessing soaring bankrupty or foreclosure (stora enso, Mreal mils etc...).


Anonymous said...

"The bulk of houses and flats built in Finland waste energy with properties offered by the big builders commonly rated D
the average energy efficiency of Finnish homes was first-rate two decades ago but had gone downhill since then."



Anonymous said...

YIT profit down 13% but still 60,5 million Euros.

"YIT said it expected its full-year sales and pretax profit to outperform last year's"

It seems that the bubble has still not burst here.


Anonymous said...

Finnish households show some financial sense in switching out of funds...but face losses in assets due to share prices falling, high-risk financial 'assets'. Staggeringly loan based financial liabilities were up 11%