The price development of dwellings has varied much in around 40 last years. During the overheating of the housing market, prices rose in the last quarter of 1988 by over 40 per cent in comparison with the previous year. Correspondingly, during the recession in the early 1990s, prices of dwellings fell by as much as 20 per cent from the year before. From 1996 prices of dwellings have been rising constantly until mid-2008, with the exception of the year 2001. The outbreak of the international financial crisis in autumn 2008 slowed down the housing market and prices fell from the third quarter of 2008 until the first quarter of 2009. Starting from mid-2009 prices of dwellings have continued rising again.
Over this period changes in wages and salaries have been more moderate than changes in the housing market, except for the mid-1970s, when the rise in earnings level caused by the great inflation was over 20 per cent per year. Over the 2000s wages and salaries have gone up yearly by an average of four per cent. The average year-on-year rise in prices of dwellings has been one percentage point faster, which has weakened the purchasing power of wages and salaries in the housing market.
Figure 3. Year-on-year changes in prices of dwellings and in wages and salaries
Source: Prices of Dwellings, Statistics Finland
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Contents (Prices of dwellings in housing companies 2011, 1st quarter)