"Prices for old dwellings have decreased markedly in Finland, the Central Federation of Finnish Real Estate Agencies (KVKL) said in a statement Wednesday.
At the end of September prices for two-room apartments had dropped 8.4 per cent from April, when they peaked after a long continuous rise.
The number of sales has also clearly decreased. In July-September 2008 there were 20 per cent fewer sales compared to the year-ago period.
The average price per square metre for old dwellings was 1,871 euros at the end of September, down from 2,043 euros in April.
The decrease has been even more marked in Helsinki and for larger apartments."
Lately, it seems almost fashion to bail out anything that fall or that is too big to fail, how about the housing market?
Bubble were the main characteristics of the past 20 years of economical Euphoria. From Stock market to housing bubble, it is now ending up with the bursting of the credit bubble. As some highlighted, we are simply running out of bubble...
Why housing price has to go higher and higher thus prone to speculation? after all, if one want to speculate, there are better places such as casinos or better the Stock Market... Obviously the collateral damage are mainly the young first time buyers, pushed by Euphoria and helped by smiling bankers, were willing to take heavy debt and for a very long period, for some until retirement...
"Finnish household debts have increased rapidly, Statistics Finland said in a statement on Wednesday. Last year total outstanding household debt was 80 per cent greater than in 2002.
The proportion of indebted households was highest in the 25-44 age group at 80 per cent. Slightly over one-half of them had housing loans.
They also had the largest loans: their total debt per indebted household was EUR 79,000 and their housing loan per household EUR 94,000.
The share of households with a housing loan does not diminish significantly until in the age group of over 55, and even two out of five of them still have housing loans"
Luckily, the credit crisis came on time to put an end to those silly development. A clear example was observed in Spain, where banks started to issue 50 years loan...a total non sense.
...in the meantime, you can clearly see uncompetence in daylight. Sometime you wonder if some minister didn't have to go to some kind of special training...
"Minister of Transport and Communications Anu Vehviläinen says that the government needs to consider tougher measures to pressure Russia into opening the Vaalimaa border crossing to car transport lorries..."
I can assure you that Russian lorries will have to be classified as an endanger species as they will totally vanish in the month if not days to come as the credit crisis is hitting hard the consumer. You see, In Russia, banks are not any more figthing for providing loans but are simply trying to survive...
How about "David and Goliath II", that's not the latest Hollywood or Bollywood movie but the latest headline on YLE:
"Finland and France are on collision course as the European Union summit begins in Brussels. Finland is willing to reject a French proposal on further processing of the EU's energy and climate package."
So if I summarize, Finland is rejecting a French proposal and is flexing its muscle against Russia...I guess they really deserve not to have any banking crisis, at least to reward their acute sense of humor...
7 comments:
HousingFinland
http://www.stat.fi/til/velk/2007/velk_2007_2008-10-15_tie_001_en.html
"Outstanding debts of household-dwelling units grew by 80 per cent and their disposable monetary income by 20 per cent between 2002 and 2006. The rate of indebtedness, i.e. debts relative to disposable monetary income, went up from 70 to 98 per cent among them over the examined time period. The rate was highest, or 183 per cent of income, for household-dwelling units in the 24-35 age group. Debts per household-dwelling unit amounted to 1.5 times disposable annual income in the 35-44 age group. However, over the examined period the rate of indebtedness increased most in the youngest age group of under 25-year-olds: from 58 per cent in 2002 to 88 per cent in 2007."
Some points if I only narrow my total vision down to the tiny point of detail that this data provides here in Finland while i totally ignore the bigger picture of other World trading partner events.
1. Total indebtedness at 98% seems lower than the 120% reported on this blog in graphs? From one point of view this is not a big figure?
2. So while the small age range of the 24-35 age group have the same "terrible" indebtedness of the entire UK population, many other groups have a much better indebtedness level.
So again i have to say that given the improvements in housing quality that are taking place *per person* in Finland where people are so hungry for their 'own home house' this data is relatively not so bad.
The issue though is this data is now more or less irrelevant. Events elsewhere are now where the focus is. Who will buy cruise ships and cruise ship systems? Who will travel on such boats? The implications for who is going to buy Finnish products are exstremely alarming *if* we take at face value that we really are in the most terrible credit crisis we have ever experienced. I see some of the Tallin ferries are going bust. I see already many job losses and this thing has not even begun. Either we are being deliberately scared for some purpose (One world currency) or we really do need to be a bit concerned. At face value the US economy is falling off a cliff now.
hmmmm. maybe by the time you northern hemisphere folk wake up the economies might be already nearing the bottom........the level of bearishness is more or less off the richter scale of disaster possibilities.
"At face value the US economy is falling off a cliff now."
The US comes with the bail out package of 700 billiond dollars. Europe is coming with a similar kind of package of double the size.
Clearly none of those country have the money to fund it. So who will be willing to pay for that? Usually it has been China and the Middle East....although the situation has changed since they might have rising problem, they might want to scale down the way they fund developped country debt.
Now, if one want to fund this debt, where would it go? U.S. or Europe?...the U.S. has had a aggressive policy response that might give confidence that they will get out of the problem first. Europe is a mixed bag where each country are looking for their own problem/interest...thus it doesn't provide confidence among external investor that Europe should be a place where money should flow....
Total indebtedness at around 100%, as stated by the Bank of Finland i.e Erkki liikanen. It could have gone higher due to higher money market interest rates.
But I don't think the issue is only about debt but more about economical prospect as you highlighted. Let's take the example of France, the consumer debt is about 60% and still their economy is slumping fast...
I think, I clearly highlihted that if the Baltics and Russia fall into recession then forget the export...then forget the internal consumption too as the finns are now thinking about saving amid heavy debt and a bearish confidence on the economical outlook and unemployment...
I think the government is going to boost its spending (construction, infrastructure), in order to absorb the thousands of jobs that will be lost from the real estate bust. It will as well reduce income tax (fiscal stimulus) in order to put a floor in the consumption slump and avert mass unemployement or reducing large amount of company going bust...
Now, the only positive is China/Africa...should they start or continue consuming and keep their growth at good level albeit lower level...it could change the outcome and make the global landing a soft one...but let's hope that the geopolitical situation will stay stable. Remember in 1991, the Irak war came and made things worse. In 2001 the same situation...
HousingFinland
Is it so far true that Finnish banks have not had any special assistance from Finland or outside Finland?
When you have banks making record profits last year, for me, it was clearly meaning that credit deterioration happened, overextension and risk taking occured...I didn't believe in this "new economy" world...so lots of deal, loans were given in the nordic region and most importantly the Baltics. I have highighted the Baltics as I think this will be trigger a possible earthquake in the Nordic banking system, thus the way they are currently valued...
The only rescue is if the global economy kick start soon in order to avoid a complete meltdown in those countries including Russia.
Now this is only hypothesis...
The Banking system will not collapse that is for sure. Politicians and economist will do everything or have done the right "things" to avoid such outcome. But there is a price to pay: Slower growth or no growth for years to come albeit more stable.
I think they are trying to avoid the "Japanese scenario", the no growth scenario, a 20 years deflation that destroy any assets : real estate and stock market.
To remind that scenario, in Japan, house price have been falling since they peaked in 1989. The stock market reached 40000 and since declined to today 8000...same with interest rates falling from 6% to 0.75% as of today.
One thing is sure, when people buy a house in Japan, it's not for speculation neither as an investment vehicule but simply to have a place to live, the initial purpose a house is made of ;->.
Regarding the assistance, i suppose through the central bank we could say that are already getting assitance though...
thanks for the answer there.
After i asked you about that i noticed the profit situation and the predictions for 20 to 30% declines for 2008. I suppose even if they have 200% declines for 2009 they are still in profit for 2007 to 2009. So that gives them some time to do more to prepare for the time in 2011 when for example they can modify their loans as begun in july 2008 with 3 years notice.
I dont think any part of the world is immune from what we are now seeing. China...Africa...i dont think so.
One good investment is buying Chinese currency. One year ago, one Euro is 11 yuan, now only 9 and keep on rising.
Post a Comment