• Sweden edition
 

Sweden has housing bubble: politician

Published: 24 Jul 2011 10:30 GMT+02:00
Updated: 24 Jul 2011 10:30 GMT+02:00

"A drop in house prices would hit growth, employment and state finances," writes Waidelich, who also expresses concern for indebted families, who would be hard struck by a burst bubble.

Waidelich cites Nobel laureate Joseph Stiglitz's definition of a bubble, claiming Sweden's housing market is at risk of experiencing these conditions.

"If the reason that the price is high today is only because investors believe that the selling price will be high tomorrow – when ”fundamental” factors do not seem to justify such a price – then a bubble exists.”

Waidelich criticises the governing centre-right Alliance for several policies that he feels have worsened the situation on the housing market, such as the lowered housing tax, the ROT tax deductions for building, and the insufficient amount of new apartments built.

"Inflated housing prices are a global phenomenon, but several points of the government's economic policies have fueled this problem," he writes.

In order to soften the blow from falling prices, however, Waidelich is open for cooperation over party lines. He also suggests that subletting apartments should become easier.

TT/The Local/cg (news@thelocal.se)

Your comments about this article

13:52 July 24, 2011 by canuk
this is not rocket science, the drop in prices is a result of the 15% down one must now do to secure a mortgage...
18:58 July 24, 2011 by bjorkon
Prices have hardly fallen yet .. and most banks are only too glad to lend you the other 15% unsecured at a higher rate of interest. But since this is the only part you really have to pay off in full you have another reason for the bubble. As long as they dont change the rules too much or whack up interest rates or China goes pop (which it ight be soon) and Swedes lose too many jobs i will carry on inflating.
21:15 July 24, 2011 by Abe L
Canuk already touched base on one of the biggest problems in Sweden today. The enormous downpayment you need to make when you wish to pursue getting a mortgage for a house. In addition to the 15% downpayment there are another few taxes that you need to pay that combined make up almost another 5% of the property's value.

The government would do well by scrapping those taxes and force banks to hand out 100% mortgages according to your solvency. It's very hard to save up money in Sweden simply because the government likes to strip you off every penny you earn. If they can't change the current situation accordingly, there should be a tax relief for those wanting to save up to buy a house.
21:26 July 24, 2011 by DamnImmigrant
This is such a non-issue except to people trying to sell right now.

The price goes down, then the price goes back up. The only people who loose are the people who do panic selling. Patience is the key word with investments.
21:40 July 24, 2011 by Acero
DamnImmigrant, you bloody damn immigrant 'ya! Of course this issue affects more than the people who are trying to sell right now! A housing bubble affects most of a generation ...ok, it might only be the people wishing to sell who loose in real and nominal terms at that given time but the prices fall for a reason, and the ones who are still paying for over-priced housing, are being crucified by high repayments.

When house prices fall it is generally in conjunction with a slow down in economic growth AND activity. meaning people arent paid the sort of bonuses they WERE getting etc etc and ya would generally have more (if even only by point zero percentages) people unemployed.

(love that name!!)

Abe....although your argument was good.....you made the cardinal sin of saying that the banks should hand out 100% mortgages. Never ever should this happen. Purchasers have to learn to save when buying such a large valued asset. The higher the downpayment, the more realistic the house prices will be.

A 100% mortgage takes the value of the property out of the equation and solely looks at ability to repay.

Where as when you have a deposit to put down on a house, it reflects a genuine monetary level. Which the market will dictate never becomes exorbitant.

When china goes..say good buy to australia and vancouver. two of the worlds worst housing bubbles
12:53 July 25, 2011 by Nemesis
100% mortgages lead to US style bankruptcy of the entire country.

100% mortgages should never be allowed.
Today's headlines
National
Northern Swedes wake up to September snow

Northern Swedes wake up to September snow

Summer has come to a definite end in Kiruna as residents of the northern town were greeted with a blanket of snow on Sunday morning. READ  

Elections 2014
Ex-Prime Minister: Sweden is falling apart
Former Swedish Prime Minister Göran Persson. Photo: Leo Sellén/TT

Ex-Prime Minister: Sweden is falling apart

Former Swedish Prime Minister Göran Persson has said that the election success of the Sweden Democrats is a "slap" in the face for the Stockholm establishment. READ  

National
Trio prosecuted for hate attack against Somalis
Somali nationals taking part in a demonstration against deportations in Stockholm. File photo:Björn Larsson Ask/SvD/ TT

Trio prosecuted for hate attack against Somalis

Three young men in southern Sweden suspected of attacking Somali refugees with stones and screaming "sieg heil" have been indicted on charges of racial agitation. READ  

National
Swedish airfares to get cheaper in 2015

Swedish airfares to get cheaper in 2015

Sweden is set to buck the European trend of rising air prices with fares expected to drop next year according to a new report. READ  

National
Swede's homemade submarine nets fortune
Eric Westerberg's homemade submarine Isabelle. Photo: PS.nu

Swede's homemade submarine nets fortune

A Swedish submarine enthusiast who spent over 3,500 hours making his own vessel has sold his prized possession for 705,000 kronor ($98,500) in an online auction. READ  

National
Cops reported for making 'Roma' comment

Cops reported for making 'Roma' comment

Police in northern Sweden have been reported to the Equality Ombudsman for describing a wanted suspect as having a "Roma appearance." READ  

Donald Duck and Zlatan get Swedish votes
A political career for Zlatan? Some fans seem to want to see that. Photo: Peter Dejong/TT

Donald Duck and Zlatan get Swedish votes

The Bilderberg Group, the Satanic Initiative and Adolf Hitler all received votes in Sweden’s general election, according to a list released by the country’s electoral authority. READ  

Sport
Stockholm fails bid to host Euro 2020 games
The Swedish team in action. Photo: TT

Stockholm fails bid to host Euro 2020 games

Sweden's capital has missed out on a chance to host any Euro 2020 games, with Copenhagen the only Scandinavian city among the thirteen winning locations. READ  

Vicar: God rejects fans of women priests
Antje Jackelén, Archbishop of Uppsala, is the first woman to head the Swedish church. Photo: Stig-Åke Jönsson/TT

Vicar: God rejects fans of women priests

A Swedish priest has been fired after telling his congregation that people who support female priests would be rejected by God - despite the fact that his own church is led by a woman. READ  

Analysis
Women set to dominate top post-election jobs
Margot Wallström (right) could become Stefan Löfven's new Minister of Foreign Affairs. Photo: TT

Women set to dominate top post-election jobs

Sweden could soon get a female Foreign Minister, Fredrik Reinfeldt's ousted Moderate Party is preparing for its first woman leader and the grandmother of actor Hugh Grant's son is being tipped as Parliament's next Speaker. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
The 'black gold' of Sweden's west coast.
National
West Sweden prepares for the 2014 lobster premiere
Society
What's on in Sweden
Politics
How Sweden Democrats went mainstream
Politics
Scandinavia and Scotland: closer links?
Gallery
Property of the week - Eskilstuna
Blog updates

20 September

How a Frog Can Save the Environment (Stockholm in my American Heart) »

"What we do we imagine when we think of children enjoying nature? Perhaps it’s fishing, marveling at lightning bugs on a muggy July day or blowing on the wispy petals of a dandelion to make a special wish. But perhaps most iconic of the playful innocence in childhood is hopping after and trying to catch..." READ »

 

19 September

Editor’s blog (The Local Sweden) »

"Happy Friday readers! It sure has been a exciting week in Sweden, where we’re set to get a new Prime Minister after Fredrik Reinfeldt stepped down following Sunday’s elections. The Local blogged live from the key political gatherings across Stockholm. Why not re-visit the action by taking a look at our photos, tweets, videos and analysis? Since the..." READ »

 
 
 
Sponsored Article
How to start a business in Stockholm
Society
How I became a surf blogger when I moved to Sweden
Gallery
People-watching: September 13th
Society
Why is Stockholm's Södermalm so cool?
Gallery
People-watching: September 11th
Gallery
People-watching: September 13th
Politics
Five possible election outcomes
Politics
Sweden elections: How do they work?
Politics
Sweden elections: Who's who?
Gallery
Property of the week - Hornstull, Stockholm
Analysis
Five differences between the UK and Sweden
Welshman Jonny Luck is now a chef in Sweden
Society
How I opened my own restaurant in Sweden's Malmö
Sponsored Article
Stockholm tech fest: relive the magic
Gallery
People-watching September 8th
Photo: TT
Politics
Feminists fight for first seats
Politics
Immigration cut push from Sweden Democrats
Sheryl Sandberg says women have "low expectations"
Tech
Facebook exec talks women's limits in Swedish business
Politics
Left Party calls for justice and equality
Politics
Green Party wants 'better world' for kids
Lifestyle
The five best Swedish songs of the month
Sponsored Article
Introducing… Insurance in Stockholm
Sponsored Article
Graduates: Insure your income in Sweden with AEA
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

867
jobs available
Swedish Down Town Consulting & Productions
Swedish Down Town Consulting & Productions is an innovative business company which provides valuable assistance with the Swedish Authorities, Swedish language practice and general communications. Call 073-100 47 81 or visit:
www.swedishdowntown.com
PSD Media
PSD Media is marketing company that offers innovative solutions for online retailers. We provide modern solutions that help increase traffic and raise conversion. Visit our site at:
http://psdmedia.se
If you want to drink, that’s your business.
If you want to stop, we can help.

Learn more about English-language Alcoholics Anonymous in Sweden. No dues. No fees. Confidentiality assured.
AA-EUROPE.ORG/SWEDEN