Wednesday 13 February 2008

"Monopoly" Game : NCC, YIT and Finnish Government



NCC Q4 profits fall 17 pct on weakening demand

'During the fourth quarter, demand slackened in Finland and the Baltic region. Due to a more sluggish sales trend, NCC's proprietary housing starts decreased,' said the company, 'NCC is of the opinion that the Nordic housing market has peaked'.

The company said the 2008 outlook is 'favourable' for the markets in which it is active, but added that growth is expected to be lower than in 2007, and the Nordic and Baltic housing markets are 'subject to increasing uncertainty'.

No surprise to this NCC statement. We clearly know that the market peaked sometime in late 2006. The market is sluggish that's obvious. Are we going to see an acceleration of house price as in 2003 after a 2002 slowdown? I don't think so.

Now the question is about how far and fast will the prices fall? it's not up to Finland or Finnish policy makers. They had an opportunity 5 years ago to clean and adjust the housing policy. They have failed after receiving warnings from the OECD especially with regards to land tax and planning. At the end it's up to the health of the world economy, whether or not the US goes to a recession and if Europe follow suit...

You wonder where was the housing minister during all those years too. Unfortunately, you can't put all on incompetencies , it would be too easy. Otherwise by just changing the housing minister and you solve the issues... it's bigger than that, conflict of interests, municipalities unable to reform themselves setting short view goals...


Just notice that yesterday, YIT received a 80 millions Euro to build a "Tunnel" under Keha1 road/leppavaara... just estimate the number of housing that they could have created instead of creating a useless tunnel (common sens would have pushed them to build a new road instead). Now it's true that YIT outlook doesn't look good, a bit similar to NCC...So this tunnel is just a municipality and government sponsored bailout for YIT... corruption no, let's call it rescue process inline with EU competition framework...

Still the question is when would the first time buyers see the end of the tunnel, ;->...ask YIT , the municipalities and government... and just tell them it's not any more a "seller" market ... readjustment is coming be patient...

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