Housing affordability in Finland near record high
4.6.2009 09:00A notable rise in housing affordability in Finland occurred in the first quarter of 2009. The nationwide index value stood at 32.4, in contrast to 40 in the last quarter of 2008. Lower housing prices and mortgage rates enhanced housing affordability. The average interest rate decreased from 4.9 per cent in the last quarter to 3.0 per cent.
Housing affordability was lowest in Helsinki (45), where the drop was 12 index points, though. Best affordability was in Kajaani (22). The monthly loan servicing cost of a household in Helsinki fell by 195 euros from the previous quarter, now totalling 733 euros. The decline of the monthly cost of a household in Kajaani was 69 euros, amounting to 304 euros.
Housing prices decreased slightly nationwide, with an average home price of 140,621 euros. The average for Helsinki is 221,875 euros, but the least expensive homes can be bought in Kajaani for 92,006 euros.
- Regional differences have narrowed due to differing price development and a deeper fall in the Greater Helsinki Area. The last time the index was lower in Helsinki in 1996, and now that the monthly cost has come down by as much as 300 euros in six months we can state that housing affordability is near record high, says Tarja Svartström, Nordea's Private Economist.
| Home price | Monthly loan servicing cost |
Index 4/08 | Index 1/09 | Change | |
|---|---|---|---|---|---|
Whole Finland |
140,621 |
465 |
39.9 |
32.4 |
-7.5 |
Helsinki |
221,875 |
733 |
56.9 |
45.0 |
-11.8 |
Espoo |
197,606 |
653 |
47.1 |
37.6 |
-9.5 |
Porvoo |
159,130 |
526 |
41.3 |
35.4 |
-5.9 |
Vantaa |
166,426 |
550 |
44.4 |
36.8 |
-7.6 |
Tampere |
146,150 |
483 |
40.8 |
33.1 |
-7.7 |
Hämeenlinna |
121,498 |
402 |
35.4 |
29.5 |
-5.9 |
Kuopio |
126,413 |
418 |
37.2 |
30.7 |
-6.5 |
Turku |
121,498 |
402 |
36.0 |
29.1 |
-6.9 |
Joensuu |
120,730 |
399 |
34.8 |
30.2 |
-4.6 |
Mikkeli |
113,126 |
374 |
34.9 |
28.1 |
-6.8 |
Lappeenranta |
125,798 |
416 |
36.2 |
30.4 |
-5.8 |
Jyväskylä |
121,498 |
402 |
34.6 |
28.5 |
-6.1 |
Vaasa |
112,896 |
373 |
32.8 |
26.1 |
-6.7 |
Oulu |
115,200 |
381 |
30.8 |
26.3 |
-4.5 |
Lahti |
112,358 |
371 |
33.0 |
27.6 |
-5.4 |
Seinäjoki |
105,293 |
348 |
31.5 |
25.9 |
-5.6 |
Kokkola |
100,608 |
333 |
31.5 |
25.9 |
-5.6 |
Kotka |
100,608 |
333 |
28.4 |
23.7 |
-4.7 |
Rovaniemi |
106,291 |
351 |
29.1 |
25.8 |
-3.3 |
Pori |
93,773 |
310 |
26.6 |
22.5 |
-4.1 |
Kajaani |
92,006 |
304 |
27.1 |
22.1 |
-5.0 |
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. The smaller the figure, the better the household's purchasing ability.
For further information:
Tarja Svartström, Private Economist, +358 9 165 88186, +358 40 826 2006
Reijo Heiskanen, Economist, +358 9 165 59942, +358 50 568 6623
