- Sweden edition
- Change edition:
- France |
- Germany |
- Norway |
- Switzerland
February 14, 2012
Economists reject 'housing bubble' report
Published: 26 Feb 10 14:55 CET | Double click on a word to get a translation
Online: http://www.thelocal.se/25236/20100226/
Economists from state-owned mortgage lender SBAB have rejected as unfounded warnings from the National Housing Credit Guarantee Board (BKN) that Sweden stands on the precipice of a house price crash.
- State warns of housing boom and bust (23 Feb 10)
The pair, who are employed as economists at the state-owned mortgage lender, said the idea that rising interest rates will increase mortgage payments is "no surprise" and that most market commentators have incorporated this in their projections.
Pousette and Borg argue that Riksbanken rate hikes will not come as a surprise to households as the rates will tick up gradually - taking three years to "normalize" at around 4 percent.
The pair also questioned BKN's interpretation of statistics it claimed to show that Swedish households have been mortgaging their homes for alternative investment or consumption to the tune of 45 billion kronor ($6.3 billion) per annum over the past decade.
The SBAB economists argue that it is very difficult to ascertain how much of this money has been used for maintenance and repairs of existing properties and thus the amount extracted is probably much lower.
They recognise that there would have been much more cause for concern had this money been used for the consumption of cars, holidays and food.
Furthermore the pair also point out that household savings rates have climbed steeply during the finance crunch and that mortgage holders have a significant buffer to guard against the added burden of rising interest rates.
"The forecast from BKN of a 20 percent decline in housing prices is thus excessively pessimistic," they conclude.
Peter Vinthagen Simpson
news@thelocal.se
+46 8 656 6518
What do you think? Leave your comment below.
Fark It!
Digg This
Share everywhere
Send to a friend
Printable version
Twitter ThisEU to probe Sweden's 'economic imbalance'
Sweden is among twelve countries set to be discussed in a report from the EU commission, due to what the European Commission has identified as imbalances in the economy. READ (6 COMMENTS) »
House prices in Sweden begin upward climb
After observing a slight rise in real estate prices after the first month of 2012, Swedish realtors are hoping that this may be the beginning of a positive trend after last year's plummeting prices. READ »
Swedish recruiters check jobseekers on the net
40 percent of recruiters are checking potential employee’s social networking pages during the hiring process, a figure which has shot up from last year, according to a recent report. READ (3 COMMENTS) »
Narcolepsy victims in new compensation bid
Families of children in Sweden suffering from narcolepsy caused by vaccination for the swine flu can expect some form of compensation, Swedish health minister Göran Hägglund said on Sunday in response to new calls for help from parents. READ (1 COMMENT) »
Saab shares dive despite strong 2011 report
Swedish defence group Saab on Friday reported a major boost in earnings for 2011 thanks to winning several major contracts, but a drop in orders left investors jittery, sending Saab's stock price down nearly 10 percent. READ (3 COMMENTS) »
Mats Sundin in massive kid's health research gift
Mats Sundin, the ex-Swedish hockey great, has made a donation supporting research into children's health at Karolinska Institutet in Stockholm and the University of Toronto. READ (5 COMMENTS) »
H&M under fire over Cambodia mass faintings
H&M has been criticized for choosing not to attend a hearing to highlight poor conditions for textile workers in Cambodia, where hundreds of employees at a plant run by the Swedish fashion giant mysteriously passed out in August. READ (6 COMMENTS) »
SAS earnings hit by Spanair bankruptcy
The bankruptcy of Spanair pulled SAS into the red for 2011, despite improved operating profits, the Scandinavian airline reported on Wednesday. READ (2 COMMENTS) »
Saab to cut Swiss Gripen fighter price: report
Swedish defence group Saab have announced that it will cut the price on its Gripen fighter jet to secure its Swiss order after a threat by French planemaker Dassault to undercut them. READ (6 COMMENTS) »
Few Swedes ready to work until they're 75: poll
An overwhelming majority of Swedes disagree with Swedish prime minister Fredrik Reinfeldt's suggestion that workers should be ready to stay on the job until they are 75, a new poll shows. READ (34 COMMENTS) »
- 07/02 US ISPs block hacker probes: Swedish police (5 comments) »
- 06/02 Kinnevik in bid to buy up publisher Metro (2 comments) »
- 06/02 Fire brigade slammed for 'renting out' rooms (2 comments) »
- 03/02 New bidder in the Saab saga shows its hand (8 comments) »
- 03/02 Volvo group announces record sales for 2011 »
- 03/02 TeliaSonera reports profit drop for 2011 »
- 02/02 Electrolux profits plunge amid weak demand »
- 02/02 AstraZeneca job cuts hit Södertälje hard (7 comments) »
- 02/02 Europe's banks set for years of 'shrinkage': Borg (2 comments) »
- 01/02 'Underclass-safari' post lands official in trouble (1 comment) »
20 things to know before moving to Sweden
As diverse as Sweden is, there are a few societal norms that are distinctly Swedish. Understanding a handful of them will hopefully prepare you culturally before you relocate. When you're invited home to a Swede, you better be on time and take your shoes off, writes expat Lola Akinmade-Åkerström. Read more »
How far can English take you in Sweden?
Sweden is a country where almost everyone can speak English. So why bother to learn Swedish? Edina Varnagy from Hungary managed with English for a whole year but then found that Swedish could open doors – to a job, a social life and greater understanding. Read more »
| 14/02 | YOUNG TALENT PROGRAM - AUTOMATION ENGINEER FOOD PROCESSING Tetra Pak |
Lund |
| 14/02 | Regulatory Affairs Associate Poolia AB |
Göteborg |
| 14/02 | Software Engineer - Online EA DICE |
Stockholm |
| 14/02 | Software Engineer - Gameplay/Audio EA DICE |
Stockholm |
| 14/02 | Sales Representative Nordic Occlutech International AB |
Helsingborg |
| 14/02 | Principal Software Engineer - Limited Contract Monster |
Prague |
| 14/02 | Surveillance Advisor, Sweden NASDAQ OMX |
stockholm |
| 14/02 | Baseband testers to telecom job in Mid Sweden Qwork AB |
Karlstad |
| 14/02 | Senior UX Engineer (.NET) - Limited Contract Monster |
Prague |
| 14/02 | Sales Coordinator Bureau Veritas S.A. Frankrike Filial |
Göteborg |
- 14/02 Investor confidence tops 10-month high »
- 14/02 OECD sees German growth slowing in 2012 »
- 13/02 Deutsche Bank 'to pay €800 mln' in Kirch case »
- 13/02 Greece leaving the euro not so scary - Germans »
- 10/02 Berlin defies EU over copyright deal »
- 10/02 Germans don't trust Greece to tighten belt »
- 09/02 Tourists flock to Germany in 2011 »
- 09/02 Daimler books record €6-billion profit »
- 08/02 Exports top €1 trillion despite euro crisis »
- 08/02 GM threatens major job cuts at Opel »
- 13/02 Looking for a long term appartment
- 13/02 Babysitter
- 13/02 flat or room available
- 13/02 Party Photographer
- 13/02 Apartment Near Arlanda
- 13/02 Apartment Needed Immediately
- 19:12 E-Mail replies from Swedish Businesses
- 19:09 SFI - personal number loop...
- 19:08 Upper abdominal pain
- 18:20 Need to replace windows
- 18:05 Women drivers & safety
- 17:52 Where do you live?
- 17:39 Big Fat Gypsy weddings
- 16:58 Volunteering in Sweden
- 16:01 What is death?
- 15:43 Tax deductible for rented property
Swedish Down Town PR Consulting and Productions is an innovative business company which provides valuable assistance with Public Relations and Communications in the swedish and the international market.
www.swedishdowntown.com
Find products and services that are specifically focused on English speakers living in Sweden!
FULL DETAILS
British-Australian Male Counsellor. Counselling Therapy for Depression, Mental Health, Sex, Relationship & Expat Issues
08-559 22 636 or CLICK HERE
Individuals & Couples - Stockholm Beth Rogerson PhD - Clinical, Marriage & Family Therapist
Click or call 08-5580 1266 now
Therapy in English in Stockholm Trained in California Individuals & Couples (08) 93 81 48 FREE phone consultation
Visit anxiousorblue.se
The new Online Tennis Store with the largest selection of Babolat Products in Sweden
http://www.babolatshop.se
Turning Point Counselling centre offers the international community of Stockholm a safe space for personal development, counselling and coaching.
http://www.turning-point.se/show.asp
Your comments about this article:
The comments below have not been moderated in advance and are not produced by The Local unless clearly stated. Readers are responsible for the content of their own comments. Comments that breach our terms and conditions will be removed.
1. They work for a state-owned mortgage lender. This means that their livelihoods depend on a housing bubble and mortgage activity. Unsurprisingly they claim there's no problem. After all why scare away potential customers? No ciustomers, no job.
2. It's possible to predict whether the markets and the public are viewing increased interest rates as 'no surprise'. If it's expected people's savings habits and spending habits will already be geared up to accommodating the impact of the increases. It's called forward thinking. If you look at personal debt levels in Sweden I don't think there's much evidence of either contingency saving or spending control.
Conclusion - vested interests have said exactly what you would expect vested interests to say.
Generally, I think that availability of chap mortgages is skewing the market. It drives prices of apartments and houses beyond sanity. There is something like elasticity of demand and supply - cheap mortgages increase demand for apartments, that drives prices of apartments up, that in turn drives up demand for mortgages. Here, there is a problem - increased demand should drive price of mortgages up - but it doesn't. We end up with positive feedback system driving estate prices to cosmic levels. that is what happened in Spain and that is what happens in Central-Eastern Europe. Estate prices are way beyond sanity. The bubble in Spain has burst, but the bubble in Central-Eastern Europe hasn't - it wasn't blown enough. Price increase has stopped, but that's all. This scenario is actually possible in Sweden.
As has been commented already so called "economists" working for mortgage lenders are the very last people you should listen to for sound advise on the direction of the market, here in Ireland they were the very ones who were saying that prices would not fall and the housing market would have a "soft landing" etc. Even now having been proven wrong they still implore people to buy by saying that the market has now bottomed, there has never been a better time to buy etc. etc. They do the devil's work.
Having spent a week recently house hunting around Skanör/Falsterbo/Höllviken it is my opinion that houses in that area are at least 25-30% overvalued at present.
The price of houses is all about confidence in the market, once confidence is undermined the market will fall, forecasts such as that from BKN of a 20 percent decline in housing prices helps to undermine confidence, other factors will no doubt also contribute.
Moreover the way that Swedish mortgages are structured with the so called "bottom loan" which is an interest only payment leaves Swedish mortgage holders much more vulnerable to increases in interest rate rises, especially those who have max'd out the size of their mortgage based on what they can afford to repay.
Interest rates are going to go up that's already been said by the Riksbank.
Trees do not grow to the sky! The price of houses do not always go up.
Sure there are plenty of places in Sweden you can find housing at good value (mostly rural), but in areas where there has been high demand in or near the main population centres the bust is coming and IMO a fall of only 20% is probably optimistic rather than pessimistic.