Nordea: Further improvement in housing affordability
(Thomson Reuters ONE) - Housing affordability continued to improve in the second and thirdquarters of 2009. At the end of the third quarter the index value onnationwide level was 31.0 compared to 32.4 in the first quarter. Thevalue is now at its lowest since 1989 when Nordea started itscalculation of the index. The currently record low interest rates onhousing loans enhance housing affordability. During the review periodthe interest rate dropped to 2.3 per cent from 3 per cent in thefirst quarter.Housing affordability scored lowest in Helsinki (43.6) showing adecrease of 0.9 index points. The monthly loan servicing cost of ahousehold living in Helsinki remained unchanged compared to the firstquarter at EUR 747. Housing affordability was best in Pori (20.6)where monthly loan servicing cost declined by EUR 26 to EUR 290. Thelower the index value is, the greater the housing affordability.Home prices rose throughout FinlandThe average price of a home in Finland is EUR 149,376. In Helsinkithe average price is EUR 244,224. Housing is least expensive in Poriwhere the average price is EUR 94,771.- The housing affordability index reached an all-time high in thethird quarter. The servicing costs of a new housing loan in relationto income were now even lower than at the end of 1996 when they werepreviously at their lowest. Housing affordability was poorest in 1989when the critical level of 100 points was clearly broken especiallyin the Greater Helsinki Area, says Nordea's Private Economist AnuNumminen.However, housing affordability is not as advantageous as it could bein all areas; as in the case of Helsinki city centre. Housingaffordability is still markedly better than in the previous peaks inOulu and Jyväskylä, for example.- This time housing affordability is strongly enhanced by theexceptionally low interest rates. Calculated with the averageinterest during the euro era (4.4 per cent), housing affordabilitywould now correspond to the average level of the past 10 years. Shortrates are likely to remain low well into 2010, but borrowers shouldkeep in mind that over the next 10 years interest rates may be on thelevel witnessed in the euro era so far, or may rise even higher, saysEconomist Reijo Heiskanen. Monthly loan servicing Index Index Home price cost 1/2009 3/2009 ChangeWhole Finland 149,376 457 32.4 31.0 -1.4Helsinki 244,224 747 44.5 43.6 -0.9Espoo 213,581 654 37.7 36.7 -1.0Porvoo 158,515 485 36.3 32.5 -3.8Vantaa 172,186 527 36.2 33.9 -2.3Tampere 152,448 466 33.6 31.5 -2.1Hämeenlinna 126,874 388 29.5 27.9 -1.6Kuopio 132,173 404 30.0 28.5 -1.5Turku 128,410 393 29.6 27.8 -1.8Joensuu 123,648 378 29.7 27.8 -1.9Mikkeli 122,035 373 28.6 28.0 -0.6Lappeenranta 125,875 385 29.5 27.6 -1.9Jyväskylä 128,717 394 28.5 27.0 -1.5Vaasa 118,502 363 25.5 24.5 -1.0Oulu 118,886 364 26.6 24.9 -1.7Lahti 114,509 350 27.4 25.4 -2.0Seinäjoki 110,362 338 26.0 24.6 -1.4Kokkola 112,051 343 25.2 24.5 -0.7Kotka 101,760 311 24.3 21.6 -2.7Rovaniemi 99,379 304 25.2 21,5 -3.7Pori 94771 290 22.9 20,6 -2.3Kajaani 96768 396 21.5 20,9 -0.6In this index housing loan costs are calculated for a surface area of76.8 square metres, which, according to Statistics Finland, is theaverage size of a home in Finland. The loan taken out to purchase thehome is 70 per cent of the purchase price and the loan period is 25years.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 is100, the household spends 25 per cent of its gross income for loanservicing.For further information:Anu Numminen, Private Economist, +358 9 165 88218, +358 50 597 0447Reijo Heiskanen, Economist, +358 9 165 59942, +358 50 568 6623http://hugin.info/3068/R/1357305/330128.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 26.11.2009 - 08:37 Uhr
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News-ID 8870
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