Are we going to witness an historical housing price correction amid sharpest rise in unemployment and social tension?...and the minimum you should know in order to protect yourself from this downturn from an economic, stock market and political point of view... with a pinch of humor and sarcasm.
Friday, 31 August 2012
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87 comments:
Anonymous
said...
Too early to tell if the top in the housing bubble has been reached. But it might be about time prices went down with the weakness of the economy (including in the wider Eurozone).
"One swallow does not a summer make", neither does "one crow a storm indicate", but this crow thinks a financial storm is on its way. :(
One thing that might not be obvious about the Finnish economy is the way the taxation system is skewed towards supporting property maintenance and mortgage interest payments.
Providing the Finnish government is in a healthy position, housing is therefore supported beyond what might be obvious.
Finnish mortgage payers are now about to get another reduction in interest rates where the possibility of substantial increases in rates must now be totally off the radar for a very long time.
We must have all noticed the price of petrol and energy generally? That forms the same kind of economic slowing brake as do rising interest rates and tax increases. Conceivably we may never get big increases in interest rates ever again. Growth will be low or non-existant and that could be just he way it is all our lives.
If you believe otherwise, where is the growth going to come from??
The prospect for higher interest rates is supposed to happen at around 2014 (based on the last US FED underlined in his FOMC minutes).
Now it might be an overly optimistic view as it implies higher inflation somehow supported by higher growth (potentialy inflationnary).
in all cases, I do not see a case for high inflation - I always believed the contrary (i.e deflation).
Now would price go higher if wage stagnate (or decline)...if prices have been going up, it's only because household were allowed to rack up even more debt (blind eyes from regulators/bank whatever they communicate and historically low interest rates).
When I say blind eye...look at the way lately flat are being sold: rented land, housing company debt and the rest is left for the purchase to contract from the bank...so it seems that 60-70% of the debt is outside the realm of the bank... see for example this link : http://asunnot.oikotie.fi/myytavat-asunnot/7145507 , read carefully how it is financially packaged (I don't think such disguise exist in any other european country)
Another thing, Japan since 1990 have seen their interest rates flirting with zero and seen at the same time an declining housing market combined with an ageing population and shrinking working force
On US interest rates, as soon as the economy can withstand it they are going to have to raise more in taxes or cut government spending. Add in higher oil prices and there will be no driver for inflationary type price increases other than things being more expensive because they are harder to get 'out of the ground'
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87 comments:
Too early to tell if the top in the housing bubble has been reached. But it might be about time prices went down with the weakness of the economy (including in the wider Eurozone).
"One swallow does not a summer make", neither does "one crow a storm indicate", but this crow thinks a financial storm is on its way. :(
"Island Crow"
One thing that might not be obvious about the Finnish economy is the way the taxation system is skewed towards supporting property maintenance and mortgage interest payments.
Providing the Finnish government is in a healthy position, housing is therefore supported beyond what might be obvious.
Finnish mortgage payers are now about to get another reduction in interest rates where the possibility of substantial increases in rates must now be totally off the radar for a very long time.
We must have all noticed the price of petrol and energy generally? That forms the same kind of economic slowing brake as do rising interest rates and tax increases. Conceivably we may never get big increases in interest rates ever again. Growth will be low or non-existant and that could be just he way it is all our lives.
If you believe otherwise, where is the growth going to come from??
The prospect for higher interest rates is supposed to happen at around 2014 (based on the last US FED underlined in his FOMC minutes).
Now it might be an overly optimistic view as it implies higher inflation somehow supported by higher growth (potentialy inflationnary).
in all cases, I do not see a case for high inflation - I always believed the contrary (i.e deflation).
Now would price go higher if wage stagnate (or decline)...if prices have been going up, it's only because household were allowed to rack up even more debt (blind eyes from regulators/bank whatever they communicate and historically low interest rates).
When I say blind eye...look at the way lately flat are being sold: rented land, housing company debt and the rest is left for the purchase to contract from the bank...so it seems that 60-70% of the debt is outside the realm of the bank... see for example this link : http://asunnot.oikotie.fi/myytavat-asunnot/7145507 , read carefully how it is financially packaged (I don't think such disguise exist in any other european country)
Another thing, Japan since 1990 have seen their interest rates flirting with zero and seen at the same time an declining housing market combined with an ageing population and shrinking working force
Finnish housing seems like a vehicle, by design, to ensure a very large number of people earn various levels of higher than otherwise income.
That part at least is common to many other countries.
On US interest rates, as soon as the economy can withstand it they are going to have to raise more in taxes or cut government spending. Add in higher oil prices and there will be no driver for inflationary type price increases other than things being more expensive because they are harder to get 'out of the ground'
House prices were down .5% in August following the .5% in July
However you now have to pay €8.30 for a Hessburgar meal that surely would only have cost about €2 when the Euro was introduced.
Even the IMF is now talking about spending our way to prosperity
flats and terraced houses up by .7% in September for a .3% fall over the last three months.
Now the IMF are talking about cancelling all of the debt and spending our way to prosperity.
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