Friday, 15 February 2013
Swedish house prices have taken some beating in the past few months
such that there was beginning to the fears that the so-called
over-inflated Swedish house prices could become a bubble. It turns out
that such might not be the case.
A new report from a study commissioned by real estate companies JM ,
PWD Housing, NCC, Skanska, and Veidekke as well as the Swedish
Association of Architects, show that the Swedish housing market will
remain strong despite aspects of uncertainty.
According to the Swedish business daily, Dagens Industeri, which
reported on the findings, consulting and research firm Evidence, was
commissioned by the above-mentioned companies reviewed the arguments
for and against a housing bubble.
Evidence has looked at a number of factors such as household income,
expenses and debts and the study specifically examined trends in
Stockholm. The overall conclusion came that there is no Swedish housing
bubble., reports Dagens Industri.
"Population growth, income growth and falling interest rates explains
to a large extent the change in house prices since the end of the
1980s, "the report says.
The report devotes a special section on household debt, which states
that there are a number of factors other than housing prices that
fuelled the debt.
One is linked to great migration to the various Swedish metropolitan
regions. that even if house prices remain the same in a number of
years, the average house prices in the country will still increase.
Another factor that increased indebtedness is that construction
companies have changed their production systems, from rental apartments
to a larger share condominium.
"This means that a larger share of the financing of new housing is via
households rather than by housing companies. This contributes to the
debt in the household sector growing faster now than during periods in
which housing finance was done either with state funds or by borrowing
in the rental housing business, "the report says.
Evidence also takes up the large number of conversions from rental to
condominium. Only in Stockholm, which has the country's highest housing
prices, has more than 90,000 rental units were converted to
condominiums since the mid-1990s.
"Rising debt in the form of home loans does not automatically mean that
households have indulged in any 'mortgages party' but rather is a
consequence of the economic and demographic trends and political
Evidence overall assessment is that there seems to be no housing bubble
in Sweden. On the contrary, analyst expects a stable modestly rising
prices in Stockholm the next three years.
by Scancomark.com Team
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