Tuesday, 3 March 2009

The Broken Record

The US, an example of price correcting slowly the first year and then accelerating

"Nordic bank Nordea said in a statement Tuesday that its survey indicated that the Finnish public's housing purchasing power had improved markedly in the final quarter of last year on the back of falling house and flat prices and interest rates.

Nordea added that the average monthly cost of a 25-year mortgage covering 70 per cent of the price of a 77-square-metre dwelling in Helsinki had stood at 980 euros in the last quarter, down by 100 euros from the previous quarter

I was waiting for such release either from our "sound" finance minister (by the way where is the housing minister?) or from real estate estate agent.

Finally it came from "the mouth of the lion", what else would you expect?

So price have corrected by a fraction of percent and yet, this bank is encouraging into making one of the biggest mistake of your life.

I have said all along this blog that at this juncture, considering the type of crisis we have in our hand, it is better to wait before buying a house.

First we have the worst crisis since at least the second world war. We have record high debt and an unprecedented synchronized global economical meltdown, something not observed even during the 1930 great depression or during the 1992 the "Mini&Short" Nordic depression.

Visibility, patience and making the right decision and choice are key in such very uncertain market. Today it is a time to concentrate on real values, real skills instead of giving your borrowed life and future in the hand of bankers.

A loan for 25 years is absurd by itself and the truth is that no bankers have asked the 30% deposits as Nordea claim in their statement, indeed what they asked is guaranty against some highly illiquid collateral (another house) or collapsing one (stocks) or worse a government guaranty (at the moment the liabilities of this government is growing exponential).

Regarding rent, I bet they will fall next year and it will be historic, as I repeat the crisis we are going to witness is going to be the worse that our generation has seen: it will be long, it will see many company going into bankruptcies and most probably will see one or two Nordic banks disappear or merge (due to their implication in the Nordic housing market, Baltic investments and companies exposed to the collapsing of the export market).

I have just highlighted the risks, maybe I will be completely wrong, yet the benefit for betting that the economy will recover quickly are far lower than its opposite. Cash has been king and will be for least 1-2 years but could be for 20 years if a Japanese style scenario was to appear.

Remember, You have been warned!...

Disclaimer: Whatever is said above is wrong and does not represent the thinking or the position of the writer. Most probably this article was written by a hacker and was published unintentionally. It is strongly known that Nordea is a great and trusted bank, maybe the best in the whole universe. The view express in this article and in the comments made following this unententionnaly published article, do no represent its authors. Anything forgotten in this disclaimer can be added any seconds. By reading this article you are abiding yourself to this disclaimer.


Anonymous said...


How much are the import and export contributed to the Finnish GDP in 2007 and 2008?

Where can I find the current housing statistics, such as the unsold ones, prices per m2 per area... between 2004 and now?

Thank you for the info if available.

Billpete002 said...

If I recall in my economics course for advanced macroeconomics we talked about the housing bubble and how if the Balkans/Russia/Sweden go under Finland would be screwed as the country is now an mainly exporter to those countries.

With how Russia is devaluing their currency (again) - the Balkans declaring they pretty much bankrupt and Sweden facing a mess - I don't think its long till Finland starts their slippery slope.