Monday, 10 August 2009

Common Sense and Rationality...Help needed!


Output of the Finnish Economy...historical slump on the way


I did not know how and where to start in trying to express in few words some common sense and rationality on what is going in Finnish Finland peculiar housing and rental market.

Indeed, one has to travel around Europe in order to get enough distance for a better analysis on the situation, but if I have to put it in 2 words, it would be:
"Crap and Expensive"

Now in order to echo the words of the Finnish prime minister, the situation is bad but not as worse as the 1990's slump...I would like to extend his deep thinking by adding "NYT"...which basically mean "now" in Finnish cryptonic language. So indeed we are not as bad in the 1990's because the we are not yet there but not far. I suppose everything is deteriorating month after month, at almost all levels except in the showbiz (from Madonna to politicians corruption show).

That's it for now..switch off "the internet" and get a rest.
And those who are stress about buying...just have a rest of a year or two and relax... there is a better thing than dreaming about putting yourself between 4 walls.

7 comments:

Billpete002 said...

I wonder how the second wave of US. foreclosures will hit Finland.

With all the Alt-A and Option ARM loans resetting in 4th quarter this year and early 2010 I doubt America will look the same.

Since the first wave showed how interconnected the system is, and how all the recent "regulations" that have passed have not helped (at all) - I believe Finland is going to be on the 'short end of the stick'.

Seb said...

Wondering if you'll comment that :
http://www.stat.fi/til/ashi/2009/02/ashi_2009_02_2009-07-30_tie_001_en_001.gif

I'm puzzled...

HousingFinland said...

Technically it's a "double top" which basically mean that if we do not go over the previous high (late 2007) we are in for a big plunge...

This jump is mainlly due to record low interest rates, unlimited state and European central bank support for imcompetence in the financial sector but this is just a temporary solution put in place to avoid "Chaos"...yet people, Finnish bankers and economist do not understand the situation.

Nevertheless the policy maker triggered in 2008 all their possible arsenal of policies(interest rates cut - can't really cut any more, guaranty etc..) so to have a 2009 that look stable economically, politically and socially.

2010 is the real test as the effect of the policies will fade and the reality will take over i.e should the emerging market fail to pull Europe and the rest of the world with it we will be for a very bad time...I suppose we could enter or create a new chapter in history in term of economical, political and social event.

In the meantime, don't forget to buy weat, sugar, dry meat and all the elements that will support you in what will be a survival test...: ;-> just kidding . No stress, it would mean that the economical euphoria in the past 20 years is out and people have to readjust to a more normal way of living i.e buying housing that they can afford not in the 300 - 500 thousands as of today...

In the meantime, be productive (stop reading this blog? ;->)

Seb said...

Thanks, quite interesting lightning on the subject.
I'm looking to buy a house atm and it does not look good. Either we're in "for a big plung" but the economy will be devastated, or price will remain globally stable ... when we all know they're too high for the quality on the market.

Looking at stat.fi, I found this interesting page :
http://www.stat.fi/til/ashi/2009/02/ashi_2009_02_2009-07-30_kat_003_en.html

which suggests that - contrary to France at least - we'd still be in the friggit zone/tunnel

( http://commons.wikimedia.org/wiki/File:Tunnel_friggit_wikipedia_avril09.jpg )

Let's all be productive :D

HousingFinland said...

Hi Seb,

Contrary to France, Finland is mainly an export oriented economy thus this small open economy will most probably be hit much deeper than its French counterpart.

French is much more diversified in almost all levels and should not be underestimated.

Regarding the tunnel of Frigit, I think we are more or less in the same situation as in France (or in fact like in many other countries in Europe). Please have a look to that link http://housingfinland.blogspot.com/2008/11/housink-from-boom-to-bust.html

Having said that, politicians are now trying to disturb the readjustment which ni the short term will give some result but will be devastating for the long term future of the country...

Well being productive all the time is not a good thing so please keep reading this blog ;-Z

Anonymous said...

It looks like the builders/developers are adjusting to lower amounts of money available:

"The City of Helsinki has voiced concerns over the new construction trend whereby developers pack newly-built apartment buildings full of tiny studios and one-bedroom flats.
Furthermore, the flats are poorly designed, the city charges. Their windows face one direction only, in many cases north.
Often the kitchen and the dining area are totally windowless.
In addition, the apartments tend to be long and narrow and therefore difficult to furnish.

....

The Building Control Authority has noticed that the developers frequently apply for changes to already-approved building permits.
Almost without exception, the developers have removed from the original plans the large three and four-bedroom apartments extending through the building, by dividing them into one-bedroom flats with kitchenettes."

http://www.hs.fi/english/article/Helsinki+raps+developers+for+tiny+and+poorly+designed+apartments+in+new+buildings/1135248630283


"IslandCrow"

HousingFinland said...

Indeed Island Crow, you rightly point signs (and there are many) that the market is losing its 1,5 decade momentum...and with no doubt the decline has started and in average will last 4-6 years.

Now you need to have some kind of shock to accelerate the process instead of a slow bleeding scenario that Japan has had...

Regarding the article that HS highlights, I wonder why builders are not in court since they breach agreement on building permit...but you know what has hapenned with political donation, I would not be surprised that nothing will happen...that's life, just need to be on the right side where the law is made and not on the one where it is stupidly applied on.

I disappear for now...quite busy as of late...your comments are always welcome and interesting to read...