OP-Pohjola Group's Housing Barometer: Abolishing Home Mortgage Interest Deduction Would Not Affect Plans to Buy and Sell Homes

April 12, 2011 A third of Finns would be ready to abolish or reduce the deduction for interest on home loans. The strongest supporters were found among those aged between 18 and 25, living in rented flats and planning to buy their first home, whereas the strongest opponents were found among those with a home loan, families with children, those aged between 35-54 and those considering selling their home and buying a new one in the near future. This is the outcome of OP-Pohjola Group's Housing Barometer, compiled now for the fourth time, for which 2,000 Finns aged between 18 and 74 were interviewed by IROResearch between 17 February and 8 March 2011. This survey also reveals that almost two-thirds of the respondents would not actually change their plans to buy and sell a home if the home mortgage interest deduction were abolished or reduced. Half (51%) of the respondents also believe that such abolition or reduction will restrain home price increases. Greater home-buying intentions in areas outside the Helsinki Metropolitan Area According to OP-Pohjola Group's housing barometer, people are showing greater willingness to buy a home than in 2010. In particular, the number of potential home buyers has increased in major cities (Turku, Tampere, Jyväskylä, Lahti, Kuopio and Oulu). Around 13% of the respondents in 2010 had it in mind to buy a home during the next three years against this year's figure of 21%. - It would seem that this high level of activity is now spreading to other growth poles, states Mikko Hyttinen, Senior Vice President, OP-Pohjola Group Central Cooperative. People have shown increasing willingness to purchase homes on a buy-to-let basis elsewhere than in the Helsinki Metropolitan Area and other major cities. In 2010, 5% of the respondents planned to purchase a buy-to-let flat. Now the figure is 10%. Home-buying intentions have remained at the previous year's level in the Helsinki Metropolitan Area and other major cities. Home prices regarded as reasonable Well over half (59%) of the respondents think that home prices are reasonable or affordable. Almost half (45%) of those living in the Helsinki Metropolitan Area share this view. - Perhaps, people do not consider the level of home prices high, because the ratio of home prices to disposable income has remained roughly the same for well over ten years now. The largest group of the respondents who consider home prices affordable was found among those planning to buy their first home, i.e. 62% of them think that home prices in their neighbourhood are reasonable or affordable.  First-time buyers were also those who expressed the strongest expectation of higher home prices next year. In 2011, 63% of those planning to buy their first home expect that home prices will rise within the next 12 months, as against 52% a year ago. For more information, please contact: Mikko Hyttinen, mikko.hyttinen @ op.fi or tel. +358 (0)10 252 2211 This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Pohjola Pankki Oyj via Thomson Reuters ONE [HUG#1505398]