Friday, 22 May 2009

Housing Permits Downward Trend Continues

As no surprise the number of building permit granted for residential contruction has deteriorated further to reach a very sharp decline of about - 40% year on year.

It consolidates futher the assumption that residential market prices have started their correction in a typical 2 to 3 years bear market (at best) and implies that this is simply not a temporary correction as witnessed in 2003.

You will notice, as well, the slump from beginning of this year of permit granted for commercial and office buidings, a further sign of an abrupt end of a once overheated construction industry in a currently declining economic environment.


Anonymous said...

With the collapse of the business of new buildings, do you have any idea if repairs of old buildings are up? This might help offset some of the fall in construction work.

I know that we have just had some extensive work done on the foundations and external drains. The (local) contractor seems to have been very busy (I often see him driving past our house on the way to some project of other).

"Island Crow"

HousingFinland said...

Hi "Island Crow",

Off top of my head, "building maintenance" was one of the stimulus that the government has put in place. I remember that it was consisting of a tax rebate, 10%? and the scheme is still valid until 2010.

But the truth is you will never be able to replace or fill the gap let by the housing construction downturn... This is too massive in term of use of raw materials and the usage of so many different industries.

The positive point is on the government side, a lower than it would-be unemployment figures but in any case it is again shifting future growth as these building would have had to be renovated at some point...

The negative, price for maintenance contractors will not go down faster as it would have been without this stimulus.

In any case, with plummeting interest rates the maintenance would have been very interesting without the government intervention but I would have waited maybe a year or two when price will probably be much lower and competition starting working again...but thanks to artificial stimulus this, too,is distorted and price will stay maybe another year higher then normal plummet but compensated by tax payer money lost...

Anonymous said...

Hi HousingFinland!
Can you also give some insight into stock exchange ... Is it a good time to invest? and how the investment should be distributed? or should one still hold onto money rather then investing in stocks?

Anonymous said...

Markku Uusipaavalniemi said few weeks ago that current banking system will collapase, and we all should take money out from the bank.

Only thing goverment can do in order to kick back to banks is print more money.

Is this a wise advise? It at least sounds great since banks has destroyed whole economy and trust, banks should suffer the mistakes the make not goverment and tax payers. Em I right ?

HousingFinland said...

Regarding the market, there will still be a small correction in the days to come then a rally higher into the autumn then the big correction could start bringing the index back to March low or lower ... that one posibility.

Mr Markku Uusipaavalniemi, whoever he is real or virtual, must have lot of debt to wish that the banking system will collapse- this is a total nonsense-

second, the government, are you talking about finnish government? cannot print money - only the ECB could print money in Europe, maybe in the same way the US is currently doing - but in any case they will not generate any inflation - currently (that's important)- as wealth is destroyed as fast as the central is printing money - they are just counter balancing the effect of deleveraging and try to avert deflation.

Now you have a slight pick up which is mainly due to the fact that government have been taking more debt to try stopping their collapsing economy, in the meantime the central bankers have cut interest rates to almost nothing in real term...yet I believe this is just a bandage and the downturn will resume sometime in the last quarter when people will recognize that central bankers and government do not have any more ammunition...

So just be patient, and do not be fool to buy today an asset that could be worth a fraction in about 2-4 years time.

Anonymous said...

Don't you know U16 (Markku Uus...) the head of Finnish Curling team in last winter Olympic games.

Today he is in Finnish parlamentarian and has forseen the deep recession few years ago when no body believed him.

I'm aware of central banking system in Europe, but why Goverments in Europe and US are so inactive. European goverments should told the central bank in Europe and Us that this doesn't work now either you do something or the we'll take the power in the bank. This is not democratic at all today. They've made mistake in the central banks or bank in general they should pay the bill.