2009-11-26 08:38:06 -
London, November , 26, 2009
Housing affordability continued to improve in the second and third
quarters of 2009. At the end of the third quarter the index value on
nationwide level was 31.0 compared to 32.4 in the first quarter. The
value is now at its lowest since 1989 when Nordea started its
calculation of the index. The currently record low interest rates on
housing loans enhance housing affordability. During the review period
the interest rate dropped to 2.3 per cent from 3 per cent in the
first quarter.
Housing affordability scored lowest in Helsinki (43.6) showing a
decrease of 0.9 index points. The monthly loan servicing cost of a
household living in Helsinki remained unchanged compared to the first
quarter at EUR 747. Housing affordability was best in Pori (20.6)
where monthly loan servicing cost declined by EUR 26 to EUR 290. The
lower the index value is, the greater the housing affordability.
Home prices rose throughout Finland
The average price of a home in Finland is EUR 149,376. In Helsinki
the average price is EUR 244,224. Housing is least expensive in Pori
where the average price is EUR 94,771.
- The housing affordability index reached an all-time high in the
third quarter. The servicing costs of a new housing loan in relation
to income were now even lower than at the end of 1996 when they were
previously at their lowest. Housing affordability was poorest in 1989
when the critical level of 100 points was clearly broken especially
in the Greater Helsinki Area, says Nordea's Private Economist Anu
Numminen.
However, housing affordability is not as advantageous as it could be
in all areas; as in the case of Helsinki city centre. Housing
affordability is still markedly better than in the previous peaks in
Oulu and Jyväskylä, for example.
- This time housing affordability is strongly enhanced by the
exceptionally low interest rates. Calculated with the average
interest during the euro era (4.4 per cent), housing affordability
would now correspond to the average level of the past 10 years. Short
rates are likely to remain low well into 2010, but borrowers should
keep in mind that over the next 10 years interest rates may be on the
level witnessed in the euro era so far, or may rise even higher, says
Economist Reijo Heiskanen.
Monthly loan servicing Index Index
Home price cost 1/2009 3/2009 Change
Whole Finland 149,376 457 32.4 31.0 -1.4
Helsinki 244,224 747 44.5 43.6 -0.9
Espoo 213,581 654 37.7 36.7 -1.0
Porvoo 158,515 485 36.3 32.5 -3.8
Vantaa 172,186 527 36.2 33.9 -2.3
Tampere 152,448 466 33.6 31.5 -2.1
Hämeenlinna 126,874 388 29.5 27.9 -1.6
Kuopio 132,173 404 30.0 28.5 -1.5
Turku 128,410 393 29.6 27.8 -1.8
Joensuu 123,648 378 29.7 27.8 -1.9
Mikkeli 122,035 373 28.6 28.0 -0.6
Lappeenranta 125,875 385 29.5 27.6 -1.9
Jyväskylä 128,717 394 28.5 27.0 -1.5
Vaasa 118,502 363 25.5 24.5 -1.0
Oulu 118,886 364 26.6 24.9 -1.7
Lahti 114,509 350 27.4 25.4 -2.0
Seinäjoki 110,362 338 26.0 24.6 -1.4
Kokkola 112,051 343 25.2 24.5 -0.7
Kotka 101,760 311 24.3 21.6 -2.7
Rovaniemi 99,379 304 25.2 21,5 -3.7
Pori 94771 290 22.9 20,6 -2.3
Kajaani 96768 396 21.5 20,9 -0.6
In this index housing loan costs are calculated for a surface area of
76.8 square metres, which, according to Statistics Finland, is the
average size of a home in Finland. The loan taken out to purchase the
home is 70 per cent of the purchase price and the loan period is 25
years.
The basis for the index is that loan costs, excluding tax deductions,
should not exceed 25% of a household's gross income. If the index is
100, the household spends 25 per cent of its gross income for loan
servicing.
For further information:
Anu Numminen, Private Economist, +358 9 165 88218, +358 50 597 0447
Reijo Heiskanen, Economist, +358 9 165 59942, +358 50 568 6623
hugin.info/3068/R/1357305/330128.pdf
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