The dynamic of the Finnish economy has changed radically in the second half of 2008.
Let's go in the past and let's revisit shortly the 1990's. During that period,the Finnish economy went through a total transformation, from a closed economy toward an open and technology led economy. It allowed the country to survive its worse post war crisis.
Today we are in a similar period, if not worse. What would take finland to starve the coming "depression" before it takes the currently fragile economy by storm?
First let's highlights few points:
-The household are highly endebted, the total endebtness is even greater than the level reached in the 1990's.
-Corporate are highly endebted and now face raging global competition. Corporate are fighting their survival while easy and cheap corporate financing is something of the past.
-The ageing population and its financing as well as a change in the consumption habits will be very challenging and will be a drag on the economy.
-The level of government debt to GDP will be greater to what it was in 1990, and could therefore bring an additional parameter of instability in the years to come.
-The global econony is experiencing a synchronized slump that are mainly hurting export oriented economies which Finland belongs to.
In this kind of environment, what would the investor/consumer do?
The best strategy is observation as you don't know the next move from this "invisible enemy" i.e the economical deteriorating further and faster.
Observing that stabilization has really occured which is not currently the case as the stabilization is not organic but purely artificial maintained by central banks and government stimulus. It works in the very short term but it will not replace the private sector in the medium and longer term.
Coming back to the housing market, in my opinion, it will be very foolish to buy or invest in real estate as it will be the most hit asset during this current severe economical readjustment.
If you need to buy - because of extraterrestrial forces - then you should wait at least a year until the dust has settle. This is just a common sense observation and could be rewarded by few tens of thousands Euro. In fact the probability of having housing price higher in year time compared to the current period is nil, the probability to have futher correction is very high and very likely.
Some are afraid that interest rates will be raised as echoed by local banks lately - foolish. Interest rates will likely stay at the same level as they are now, they could even be a non negligeable probability to have them lower if the economical turmoil increases.