Monday, 9 February 2009
Where Could housing Price Fall?
I really think there is a strong probability that price could fall to their level reached in 1997.
The reasons for such correction can be listed as follow:
1- The worse global slump witnessed since the WWII will undoubtedly affect the Finnish Economy.
2- The Finnish trading partner have seen their economy falling a cliff: Sweden, Estonia, Russia, India and China.
3-Nordic bank balance sheet is greatly damaged by their exposure to the Baltics, therefore there will have to rebuild their balance sheet, meaning less loan or let's say less risk taking (which basically started since 1999)
4- House Debt level is unsustainable.
5- current price are disconnected with the future level of the economy
6- The risk to have a depression in Finland is not negligible, should the financial crisis intensify.
7-House price falling generates another dynamic, it anchor the fact that price can fall further (the reverse of a boom: bust)
8-...in fact there are so many reasons that you could add further arguments...