• Sweden's news in English
 

Swedes' high debts spark housing bubble fears

Published: 19 Feb 2013 09:04 GMT+01:00

In an interview with the Bloomberg news agency, Martin Andersson, the head of Sweden's Financial Supervisory Authority (Finansinspektionen), expressed his concern about Swedes' mounting debts.

“Swedish households today are among the most indebted in Europe and we cannot have household lending that spirals out of control,” Andersson said.

One tool already in place to dampen the growth of Swedish household debt is a mortgage lending ceiling introduced in 2010 which caps the amount home buyers can borrow at 85 percent of the value of the property.

Another option cited by Andersson as a way to reign in mortgage lending is hiking risk weights bank place on mortgages, meaning they would need to have more capital to secure their mortgage loans.

Riksbank head Stefan Ingves has also suggested new rules that would require Swedes to pay down the principal on their mortgages, although Andersson refused to say whether his agency would consider such a rule.

Last year, Swedes' household debt hit a record 173 percent of disposable income, well above the 135 percent level during the height of Sweden's banking crisis in the early 1990s.

According to Sweden’s National Housing Board (Boverket), Sweden is already in the midst of a housing bubble, with homes overvalued by around 20 percent.

As property prices have risen 25 percent since 2006, Andersson warned of a possible "downturn" in the Swedish housing market.

“House prices cannot just continue upwards in eternity," he told Bloomberg.

The Local/dl

Follow The Local on Twitter

Your comments about this article

09:34 February 19, 2013 by Mxzf
They keep saying that.

As long as it's cheaper to take loan and buy your apartment or house,

than to rent an apartment or a house of the same size and luxury level,

I fail to see how houses or apartments can be overvalued...?

(That's a pro tip for living in Sweden too: get a loan, buy your apartment. That's cheaper, better and no queues. Loans are scary, but the apartment is the security - you more or less just pay rent to the bank.)
09:46 February 19, 2013 by engagebrain
Housing bubbles burst, and burst suddenly leaving people with loans greater than the value of their property.

A the moment very low interest rates help to keep prices affordable and high, but low interest rates won't necessarily last.
10:41 February 19, 2013 by YuriG
Another option is to provide households with more disposable income so they can actually pay of the loans. Instead of burdening them with the excessive tax pressure that still exists in Sweden today.
13:06 February 19, 2013 by riose
@YuriG

Or you could increase half a point the interest rates.
13:18 February 19, 2013 by Eric1
We'll send Obama over to "fix" it. He has "fixed" America from a first world country to a three world country.
14:38 February 19, 2013 by Borilla
@Eric1

Another hater of black people speaking. Sadly, you know nothing of either Sweden or the US.

It is about time that someone spoke up about the coming burst of the housing bubble. Interest only loans and "adjustable" rates will continue to create the skewed housing prices. The only ones who benefit are the big owners (read FOF friends of Frederick). Nothing will be done about it until the bubble bursts and the bankers and all their friends get hurt. Then they will throw the middle class under the bus again.

@#1 - excellent advise for people - incur more debt than you can afford and when the bubble burst you can lose your home and everything else you own. There will be a long line to get on the TV program Lyx Fallen.
15:41 February 19, 2013 by djmarko
@Eric1 for the benefit of intelligent people here, maybe you can explain how Obama turned the US from 1st world into 3rd world, seems more like a personal abuse than anything of substance, Americans are still reeling from the trillions that was spent by the Bush administration on fighting unjust wars, how about that?? or is George Bush the right colour in your eyes?? see no wrong!! some pathetic bunch of people in here!
18:07 February 19, 2013 by Jules
Borilla & DJMarko maybe you two should re-read the post that offended you so much. Whatever you think of Eric1's statement he did not at any time in this post allude to Obamas skin colour. The first mention of race was by yourselves. Perhaps you should spend your time more profitably arguing against what he actually said rather than trying to stir up a racial argument to try and obfuscate his point and justify your own views.
22:40 February 19, 2013 by muscle
hmm who is to blame? atleast in sweden, more and more people are buying properties, because they are unable to find decent places at affordable prices in the first place!!!! people have to wait for years, before getting some affordable contract. and now with the modified rules, second hand contracts will cost even more. !!!
23:21 February 19, 2013 by Peter1234
This is a highly political issue. The Swedish government is simulating a low debt country by is moving all debt into private hands - using a policy of low interest rates on mortgages. The result is a HUGE property bubble - which still can be financed nearly for free if somebody wants to buy a property - but the bubble is waiting for the gib bang!

What come after the big bang?
10:45 February 20, 2013 by raheelj
I think sweden will make another history like Ireland in fact if someone has money then its a right time to flip the money into gold coins. Buy a property and sell with the great price.

In general I dont see this downturn will happen in near future since there is 30% shortage of apartments so still we have quite enough people for investors to make their money :)

Thumbs up for investors!
12:25 February 20, 2013 by Max Reaver
@Mxzf

You got soooooo many things wrong, here's why.

You said you fail to see how houses or apartments can be overvalued. First of all there is a difference between price and value. The true value of a house is determined by its innate properties e.g. location and condition. Price however is determined by market demands. During good times when lots of ppl with decent jobs can afford and want to buy houses, in the bidding process, the sales price of a house can be much more than its inherent value, thus it becomes "overvalued". This is not uncommon even in Sweden. My parents once went bidding for an apartment, in one day the bidders fought the price up to more than twice the starting price. At that point the real estate agents warned us to not bid any further, since the apartment was greatly overvalued.

Your statement of buying is cheaper than renting holds true only if the following conditions are met:

1. the mortgage + interest + maintenance fee do not become unbearably expensive. Apartments for sale are grouped in housing associations, you always have to pay expensive monthly fee to the association, which is usually more expensive than rental apartments. For houses the monthly fee for maintenance can be cheaper, but your mortgage + interest go up due to higher purchase price.

2. when you leave the house/apartment you can sell it at a good price. If you bought the house during a bubble and have to sell when its bust, start praying.

3. you always can support paying back the loan with good job, could be tricky if you get fired during a financial downturn.

Let's make an example here. You come to Sweden, the economy is good. You get a job and buy a house at 2 million SEK with loan. The house is worth only 1 million, but the market is hot you can't get anything below 2 million. A few yrs later, financial crisis kicks in, you lose your job, you cant sustain the cost of paying back the loan, then you are forced to sell the house. During crisis the market is cold, you can sell your 2 million house with the price of 1 million, what it's actually worth. From there you end up having 1 million in debt and homeless.
09:22 February 21, 2013 by unionisten
Well it all depends on where you have bought your house/appartment

If your in Stockholm you are pretty much safe since the housing shortage is incredible. ofcourse a total melt down might happen in the economy but lets not worry about that.

The ones whou should worry is those who have bought property to speculate like they used to do in Ireland.

If you have bought your appartment to live in then your safe
12:16 February 25, 2013 by John.Smith
Riskbank needs to increase the interest rates. That will curtail the credit crises and also slow down house price increases to inflationary levels. 25% in 6 years is steep but not property-bubble worthy if counteracted in the correct way.
16:03 February 25, 2013 by rohermoker
Most people buy housing based on emotion, not need, and therefore buy more. This makes the builders, and bankers happy. When things turn down property much like other things not of fixed value move with the market. What people fail to realize is if they buy more house than they have the cash for they are in effect renting from the bank, That is why here in the US the bank is the first name on the Deed, and you in effect renting to own from the bank, just like the"rent to own" furniture store. If you buy as a long term investment, pay cash (rembering that the price of the building and land should not be more than you can pay if you are out of work). You will be fine, if you are betting the value will increase more than the interest of the loan, you are gambeling--a fools enterprize.
Today's headlines
Spotify chief unveils Sweden innovation bash

Spotify chief unveils Sweden innovation bash

Spotify founder Daniel Ek and Avicii's manager Ash Pournouri are set to launch a major new tech and music event to reflect Stockholm's status as a lucrative hive of start-up activity, Billboard reports. READ  

The Local List
The ultimate guide to Sweden's party leaders
The outgoing leader of Sweden's Christian Democrats, Göran Hägglund, with the new leader, Ebba Busch Thor. Photo: Pontus Lundahl/TT

The ultimate guide to Sweden's party leaders

Two are pregnant, four are under 40 and nearly half are women. As the Christian Democrats elected their first female party head on Saturday, The Local's beginners' guide to Swedish political leaders reveals who has clung on to power and whose heads have rolled in the months since Sweden's general election in September 2014. READ  

Sweden Democrats boot seven in extremism row
From left, Sweden Democrat youth leaders Gustav Kasselstrand and William Hahne on Monday. Photo: Anders Wiklund/TT

Sweden Democrats boot seven in extremism row

Seven people have been expelled from the Sweden Democrats - including the two heads of the nationalist party's youth wing - in a row over far-right extremism, the party announced on Monday afternoon. READ  

Swedish arms giant one of Europe's 'cleanest'
An Air Force pilot uses a simulator to fly a Saab Gripen fighter aircraft at the LAAD Defense and Security International Exhibition in Rio de Janeiro, Brazil, Tuesday, April 14th 2015. Photo: AP/TT

Swedish arms giant one of Europe's 'cleanest'

Swedish defence giant Saab does more than most other European arms companies to tackle corruption but should give staff better access to whistleblowing channels, according to a Transparency International report released on Monday. READ  

Taxman: Cosmetic surgery is not deductible
Winners of the Miss Plastic Hungary beauty pageant. If they lived in Sweden they would not be able to make deductions for breast implants, nose jobs or face lifts. Photo: AP/TT

Taxman: Cosmetic surgery is not deductible

With next Monday the deadline for filing tax returns, Swedes will try to get the taxman to cover the cost of everything from milk to plastic surgery, explains a tax agency worker who has seen it all. READ  

My Swedish Career
Building my Swedish lego dream brick by brick
James Gill in his lego shop. Photo: The Local/Bobbie Carlson

Building my Swedish lego dream brick by brick

James Gill was working as a chef in the UK when he one day decided to combine his two passions in life: Sweden and Lego. The Local's reporter Bobbie Carlson visited his shop in Stockholm - and discovered that there is far more to the famous children's toy than meets the eye. READ  

Head rolls in Sweden’s private jets scandal
Anders Nyrén attends SCA's annual general meeting in Stockholm on April 15th 2015. Photo: Anders Wiklund/TT.

Head rolls in Sweden’s private jets scandal

A major corporate scandal involving the “excessive” use of private jets claimed a fresh victim on Monday as the main owners of investment giant Industrivärden blocked the under-fire CEO Anders Nyrén from taking over as chairman. READ  

US rap mogul Jay Z defends Tidal venture
Jay Z's got 99 problems but Tidal ain't one. Photo: Chris Pizzello/Invision/AP

US rap mogul Jay Z defends Tidal venture

Rapper Jay Z has defended his Tidal streaming service as viable and a boon to artists after a much-criticized start to the revamped company has given its main Swedish rivals at Spotify little cause for concern. READ  

Nepal earthquake
Swedes join earthquake rescue efforts in Nepal
Residents rescue items from the debris of a house damaged in Saturday's earthquake in Nepal. Photo: AP Photo/Bernat Armangue

Swedes join earthquake rescue efforts in Nepal

An expert team from Sweden is set to travel to Nepal on Monday to help with a search and rescue operation following a devastating earthquake which is believed to have claimed 3,200 lives so far. READ  

Rush-hour chaos for Swedish rail commuters
It's not the first time train delays cause headaches for Swedish commuters. Photo: Tomas Oneborg/SvD/TT

Rush-hour chaos for Swedish rail commuters

A faulty railway switch in Stockholm was expected to cause rush-hour headaches for travellers across Sweden on Monday morning after several trains were cancelled and others diverted. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Gallery
IN PICTURES: Sweden's Princess Leonore meets Pope Francis
VIDEO: How did these Swedish cops become New York heroes?
Business & Money
Five crucial things you need to know before you move to Sweden
Gallery
People-watching: April 25th
National
What's on in Sweden: April 23rd - 30th
Blog updates

24 April

Editor’s blog, April 24th (The Local Sweden) »

"Hi readers, Spring has well and truly arrived, as evidenced by the start of strawberry season. The..." READ »

 

15 April

Gång, timme, tid & dags (The Swedish Teacher) »

"Hej! In this article I will talk about “gång”, “timmar”, “dags” and “tid”, because they all translate..." READ »

 
 
 
Stockholm School of Economics
Sponsored Article
How the Stockholm School of Economics changes expat lives
National
Brits in Sweden face NHS black hole
Swedish Hasbeens
Sponsored Article
Is the world wrong to connect Sweden with sex?
Business & Money
The Swedish regions where you're least likely to stay jobless
Gallery
People-watching: April 22nd
Sport
Sweden's Eriksson joins row over foreign England player quotas
National
MEP says ignoring migrant crisis like 'Sweden's Holocaust appeasement'
Gallery
IN PICTURES: The Swedish mining town that's being moved
National
How much would you pay for first Swedish strawberries of 2015?
Gallery
Property of the week: Kungsholmen, Stockholm
Sponsored Article
Want to study in Sweden? Read why Stockholm is the best choice
Photo: TT
National
Get set for a sunny week in Sweden
Sponsored Article
Does far-north Sweden have to punch above its weight?
National
Refugees in Sweden fear for families lost at sea
National
Syria claims ‘most dangerous’ Isis leaders are Scandinavian
Gallery
People-watching: April 18th
National
Swedish researchers pore over link between coffee and cancer
Features
What you can buy in Sweden for the price of a London shed
National
What's on in Sweden this week
National
Swedes launch first donut into space
Politics
Is Sweden returning to 1990s social democratic welfare politics?
National
Mamma Mia! Abba entertainment venue set to open in Stockholm
Gallery
People-watching: April 15th
National
Why Sweden is top place in the world for expats to raise children
National
Swedish 'submarine' was civilian boat
National
Why has a US town got pulled into a Swedish spelling row?
Gallery
Property of the week: Hovås, Gothenburg
National
What does Zlatan think of his ban?
National
Swedish teenagers help rebuild Breivik massacre island
National
Would you live in a steel box?
National
How an act of kindness by one Syrian immigrant went viral
Gallery
People-watching: April 8th
National
Swedish bids for Billboard fame
National
Swedish monkeys denied Saudi visas
National
Sunny spring weather predicted
Sponsored Article
'Impossible' to run Skanska without Bromma Airport
National
Half of Swedes want begging ban
Gallery
Property of the week: Gotland
National
Why are expats less likely to settle down with Swedes?
Sport
What does Sweden think of Zlatan's recent outburst?
Society
Get to grips with Sweden's most bizarre Easter traditions
Gallery
People-watching: April 1st
National
The Local's best April Fools' gags
Sponsored Article
'Sweden must embrace openness and diversity'
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

3,310
jobs available
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:
psdmedia.se
?>