Nordic housing markets in 1980–1993

The study examines the specific characteristics of housing markets and housing price developments in the Nordic countries during the 1980s and 1990s.

Housing markets differ from other commodity markets in two respects: housing is a durable good, which means that prices fluctuate strongly in response to demand, and it is at the same time the most important asset of households. Price expectations are based on changes that have already occurred, which gives rise to prolonged periods of rising and falling prices.

All the Nordic countries experienced one pronounced price cycle, which was triggered by a credit expansion following the deregulation of financial markets. In Finland, both the rise and the fall were markedly steeper. The collapse in prices had serious consequences: households became over-indebted and some were driven into technical insolvency, which caused the housing market to seize up. For financial institutions, however, the direct credit losses from housing finance remained relatively small, with the exception of Denmark. (AI translation)

• ISSN: 1236-7176
• ISBN: 951-9282-86-6