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3. Changes in House Prices, Wages and Consumer Prices

From 1983 the prices of dwellings in old houses has risen 220 per cent. In the same time period wages went up almost by the same token and consumer prices has doubled. House market ”overheated” from 1987 to 1989, when house prices went up extremely 72 per cent. In the same period wages went up 25 per cent. During depression of the begin of 1990s house prices went down nearly 40 per cent. In the same time wages went up by 19 per cent. Buying power to get a dwelling by earned income was largest year 1995.

The house prices began to go up in year 1996. During last year of 1990 the house prices went up nearly 50 per cent. Year 2001 the house prices temporarly went down by nearly one per cent. After that the house prces have risen to mid-2008. From 1996 to 2008 the house prices went up by 120 per cent. At the same time wages went up by 53 per cent and consumer prices 24 per cent.

During this decade buying power to get a dwelling by earned income has declined rapidly. ”The price bubble” in house market was created 2006, when, house price curve has risen above wage curve (1983=100). House prices went down after mid–2008 which overhauled house market. After 1st quarter of 2009 house prices have risen rapidly, which have weakened bying power to get a dwelling by earned income.

Changes in House prices, Wages and Consumer prices, index 1983=100

Source: House Prices, Statistics Finland

Inquiries: Petri Kettunen (09) 1734 3558, Paula Paavilainen (09) 1734 3397

Director in charge: Kari Molnar

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Updated 29.1.2009