The number you quote for Helsinki (51.3) is actually a ratio of house-price to loan-servicing-costs-per-month. The numbers for Australia, UK, USA etc are ratios of house-prices to incomes.
http://www.nordea.fi/eng/info/news/20050217.ASP?navi=yritysinfo&item=news
rents vs values – who knows, it should be a free market with the price just beimg whatever it is, but as the market has been distorted so much by an attempt to provide cheap housing to low income houeholds (via subsidisation thru the tax mechanism), I believe that rents are artificially low and prices artificially high. At the end of the day it’s all academic because I doubt it will ever change.
Helsinki – correct… without researching the median incomes of the Finnish etc etc it is a pretty good guide, if 51% of your income is being chewed up by servicing, that that is more expensive than Australia. In fact comparisons across countries are very difficult to make…. highlighted by that laughable statistic on London affordability. Stats!
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
If the index is 100, the household uses 25% of its gross income for loan servicing. The lower the figure, the better the household’s ability to buy a home.So with Helsinki at 51.3 the household is using around 13% of its gross income to service the loan. That doesn’t sound too unaffordable to me.
I have to say, I don’t recall seeing any economists warning about a Finnish real estate bubble, but I see plenty warning about a bubble in Australia.
ah I see the fine print – that’s where the devil hides! I also see:
“In the index loan servicing costs are calculated for a 76.8 square metre dwelling, which is the average size of a Finnish home according to Statistics Finland. In the example the housing loan is 70% of the purchase price of the dwelling and the loan period is 25 years.”
amazing to think the average Finnish home is the size of a typical 1 bed apartment in Australia. Maybe the problem with home affordability is that everyone expects to live in a mansion.
A typical 1 bed flat in Perth would be $140,000. The median income is (I have no idea but…) say $40,000. Ratio = 3.5. Problem solved.
Whilst I have never heard of a Finnish real estate bubble, I very much doubt that the Finnish have even heard of Australian real estate!
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
amazing to think the average Finnish home is the size of a typical 1 bed apartment in Australia.I live in a suburb where 80sqm apartments regularly sell for over $500K.
Whilst I have never heard of a Finnish real estate bubble, I very much doubt that the Finnish have even heard of Australian real estate!Sure, but many economists in the US and the UK have heard of the Australian real estate bubble, and cite our market as an example of how bad things can get.
Dmichie, veryb interesting to see Aus being reconised from larger populations over seas … Phil
Originally posted by resiwealth:One interesting point I would like to note here is this, people/we/me/others are very good at reading an analysing the past yet we struggle to get the future right, go figure.
Phil,
Maybe I can help, or more accurately, maybe Bill Evans (Global Head of Economics at Westpac) can help…
Very interesting document (only 4 pages long) and well worth the read. Basically holds to my outlook of 2006/07 being flat through a gradual recovery in 2008 then back to party time! [drummer]
If you don’t want to read the lot, just read the last page before the rate projections…
Cheers,
MichaelHi Mike and thank you,
I just got back from the whitsundays you should have come and seen what’s happening at Laguna. I am planning a hill side sub division next door will let you know later.
Regards Phil
Originally posted by resiwealth:Hi Mike and thank you,
I just got back from the whitsundays you should have come and seen what’s happening at Laguna. I am planning a hill side sub division next door will let you know later.
Regards Phil
Phil,
Look forward to it… Would have dropped in when sailing up there except had a tight schedule and another couple on board too. Had a great time though!
Cheers,
Michael.
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