Finland: Warming Up

Despite a growing reputation in the football world, Finland has yet to secure a place in the World Cup finals.

One of our teams best performances came in the qualifying round for the 2002 World Cup when we faced Germany and England. We held both of these hugely experienced teams to draws, leaving us third in our group a respectable result given the strength of our opponents.

The Finnish property market has shown a long period of price inflation since the beginning of the 1990s. During the past few years, price increases have picked up and credit demand has remained strong.

The current level of household debt in Finland is lower than in other countries in the EU but has been increasing in recent years. It has to be said that we Finns are conservative borrowers.

The mortgage market in this country is different to that in the rest of Europe. Changes in housing wealth have had a significant impact on consumption in the marketplace and, with an overwhelming number of mortgages being financed at short term variable rates, disposable income and the wider economy are more vulnerable to changes in interest rates and house price cycles than in some other markets. The good news is that the overall economy in Finland has remained strong.

With property taxes being relatively low, the deductibility of mortgage interest expenses favours home owners over other investors. Also, sellers pay different rates of Capital Gains Tax depending upon the length of time a property has been owned. This is different from neighbouring Sweden where owners pay Capital Gains Tax on the sale of their main residence, irrespective of the duration of ownership.

Housing prices across the whole of the Euro zone have been on the up since the late 1990s but prices in Finland have increased at a slower rate than other parts of Europe. In 2004, house prices rose by around 7% with Helsinki seeing the largest increases. From the start of 1996 to late 2004, house prices in the capital rose by 98%, compared with just 7% nationally.

Finland is famed for its saunas and almost every house in the country has one built in. Interestingly some houses must have more than one as figures show that there are 1.1 million residential buildings in Finland boasting 1.2 million saunas.

With the housing market heating up, lets hope it wont be too long before our team puts in steaming performances on the pitch and representing us at the next World Cup.

Pekka P㳴iniemi is CEO of GE Money (Finland)