An assessment of housing price developments against various measures

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Title: An assessment of housing price developments against various measures
Author: Kivistö, Jarkko
Series: Bank of Finland bulletin. Economic outlook
Series number: 3
Year of publication: 2012
Pages: 49-58
Keywords: vuokrat; Suomi; asunnot; hinnat; kehitys; asuntomarkkinat; kustannukset; korot; kotitaloudet; käyttökustannukset
Abstract: This article discusses the development of housing prices in Finland, with a special focus on the relationship between rents and housing purchase prices (rent-to-price ratio), which is analysed against a constructed benchmark of the user costs of investors or homeowners. A comparison of the rent-to-price ratio and time series of user costs indicates that the development of housing prices relative to rents has been broadly consistent with the fall in housing user costs. The key determinants of user cost dynamics are house price expectations and level of interest rates. The interest rate fall, in particular, has had a significant impact on the reduction in user costs and, hence, housing prices. However, the increase in housing prices relative to developments in household income has been fairly moderate.
Note: ISSN-L 1797-3775 (print) ISSN 1797-3783 (online)

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