Tag Archives: housing prices

This chart tells Finnish house prices are overvalued

“Developed economy house price-to-rent ratios from Canada to Japan” http://feedly.com/k/1c1GKoJ

The chart in the link, that is.

Although it looks like house price-to-rent is fairly balanced in the Netherlands, this perhaps so because rents are so high in the Netherlands.

Dutch housing market still not good

Today’s NRC Handelsblad reports on the latest data on housing prices by the Dutch Statistics Office (CBS). The decline in housing prices is apparently a bit smaller than befor but compared to September 2012 houses are 4,1% cheaper.

But the graph in the newspaper article shows just how big the decline has been since the peak in prices in 2008. It may be a matter of time to see the influence of this development in mortgage defaults.Image

N.B. this graph shows the changes relative to the previous month.

Over- and undervalued property markets – also Finland and the Netherlands

I have written and linked about the Dutch and Finnish real estate markets. In particular in the Netherlands the (long-blown) bubble is deflating, but the possible Finnish real estate bubble is not yet deflating. This link by Credit Writedowns shows a graph which is interesting in many ways. I will only focus on Finland and the Netherlands, but as you can see from the graph, in Finland property is vastly overvalues in terms of price-to-rent, while in the Netherlands it is overvalued mostly (or more) in terms of price-to-income. The latter is no surprise given the loose policy of banks in the 90s to sell mortgages that demanded hardly any equity or cash and were several times the yearly income. From this chart it could be argued that in particular Belgium and France would be in for a rough ride, if somewhere banks start to wobble again.


As for Finland – in Finland there is a heavy cultural bias against renting, seeing that owning is an investment for the future, if not straightaway a part of your heritage. Also that money going into rents is ‘wasted’ – your house doesn’t get any nicer by it. On the other hand, Finnish rent rules stipulate quite a lot of things the landlord has to do to keep the condition of the rented property well.


Although Belgium and France are also rather overvalued on this indicator, it seems that a unifying aspect of these countries is that they have to a fairly large extent some kind of social housing system, where e.g. the city/community is the formal landlord (i.e. the property is owned by the city).


I am not sure if this is a correct way of seeing it but suppose there comes another credit crunch for governments, and for Belgium and France this is not so unlikely, there might be pressure to sell government/community property. The likely result (based on this graph at least) would be that the prices of those ‘new’ private properties soars (for a while), and thus making it very difficult for many people to keep a home.


Somehow this chart is quite worrying, even beyond the issue of non-deflated bubbles.

Finnish real estate bubble?

As Edward Hugh stated on his Facebook page on the 14th of February (can’t link that, so please look it up):

The depth of Finland’s recession may raise an eyebrow or two here and there. It was meant to be a very competitive economy. I have long felt, studying the evolution of the trade balance, that it had more to do with the periphery than the core. The economy has been supported by a housing boom, but now that appears to be coming to an end. Not so different from Denmark, or the Netherlands.

As I blogged, I have shown some Eurostat statistics on housing price developments, which I thought did not look like a boom. But now I found statistics from Statistics Finland on square meter prices in various regions of Finland, and they tell something I suspected but could not put in a graph, until now. Please note that the first graph is a combination of two time series (2000-2008 and 2005-2012) which use a slightly different methodology (mainly, the latter has much more indicators on which it measures price).[UPDATE: A commenter has longer range graphs on housing prices in the Nordic countries, which make the pattern even more clearer] The picture looks a lot like the Netherlands – a slow bubble, starting in the 1990s. As for the latter graph, Helsinki 1 is basically downtown, prime, Helsinki, while Helsinki 3 is more of a peripheral area, although public transport connections are very good. Vantaa is (traditionally) a more working class city next to Helsinki, where also the Finnish main airport is located.

Source: Statistics Finland

Source: Statistics Finland

And for the capital region:

Source: Statistics Finland

Source: Statistics Finland

I don’t know how to define a housing bubble, but it seems that Helsinki prices, especially in prime and other near-center Helsinki (this holds true also for 2-room appartments and bigger) have gone up quite a bit. That has to do partly with this:

Source: Tilastokeskus

Source: Tilastokeskus

Although Tampere and Oulu are also growth centers in a sense, the Helsinki region has a much greater pull. I don’t have time now to dissect the nature of those moving to Helsinki (age, gender, where they come from) but from what I know anectdotally, there is quite a shortage of appartments for people who need only a single or double-room appartment, mainly because they are so expensive (for students etc.)

I don’t know if this is part of the possible bubble-story but it seems to happen mainly in the Helsinki area, not elsewhere.