"Real prices of dwellings have now fallen for two successive quarters.
According to preliminary data, in the first quarter of 2008 real prices fell by 1.0 per cent from the previous quarter in the whole country.
Nominal prices went up by an average of 0.3 per cent in the whole country. Prices remained unchanged in Greater Helsinki but rose by an average of 0.5 per cent in the rest of Finland."
So price have reached their maturity, now the question is how well the economy and unemployement will hold next year. If there is deterioration, then house can fall further.
So inflation is not helping anybody, since if the price growth is lower than inflation then you certainly have a property that is deflating slowly.
I think it should come at a surprise to anybody, especially the ones that have followed this blog, that prices have reached their peak level.
2009-2010 will be a period of asset deflation. By how much? it all depends on the global economy, inflation and government policies.
See link from some tentative prediction done few months ago : Technical Housing Analysis
4 comments:
I have noted today that the main Finnish news (YLE, STT, HS) didn't speak much in their english news about the housing drop.
As usual, the one that will be hit hard is the poor or middle class, one that doesn't have the right information and doesn't know about the housing state.
The rich has long ago sold and the investors have been deleveraging in the past 2 years.
Any way thanks for sharing the information.
The idea of a housing price drop is not something that 91% of Finns would agree with!
See the news release from STT:
http://virtual.finland.fi/stt/showarticle.asp?intNWSAID=18714&group=Business
from one of the lonely 9%
"IslandCrow"
What do you expect after more than 15 years of house price growth, almost a generation that have only seen growth in nominal price?
This situation is similar to the technology stock market in 2000. When a bubble is there, it's hard to identify it, but then it becomes clear when it start bursting. The housing bubble will be similar.
If price were not to drop, you won't be witnessing a sharp contraction in the construction number of residential estate. A sign that tell that the market has clearly transformed.
I bet that by the end of 2009, you will see the first 10% drop. The economical cycle has matured to a level where inflation is a real threat like in the late 80's.
The US, the engine of the world, is experiencing atronomous issues that will send their economy to the edge of a recession. A similar faith will happen to the rest : Europe and Emerging Markets.
Now, it will be interesting to see if Pohjola Bank will survive next year sharp slowdown ...
Here is their statement published today at the same time as the survey, (a diversion??)
"- Consolidated net income decreased by 26% to EUR 133 million and expenses increased by 1% to EUR 115 million."
Another point is that OP changed its name to Pohjola. I guess, it's to mark that the time has changed and they will have to come with a new business model ...
Another point I forgot to mention. Nordic Banks are now going to get lower and lower profit if not losses.
A sharp contrast with last year all time record profit.
Under those new condition, banks will not have the capital needed to lend freely as they did.
The consequence is going to be a net tightenining of credit standards that will precipitate the fall of housing price during end of 2008 and 2009.
I'm not making that scenario, i'm just observing what is happening in other country.
Regarding Finnish economists that have been saying that the credit crunch has had no impact in Finland, I think those one are pretty ignorant or incompetent.
The impact is felt through money market, stock market and consumer confidence. They are so many global trade channel that no country is insulated of those type of crisis.
Indeed the impact will be felt , it's all going in slow motion for citizens but unfolding in high speed for serious, competent economist....
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