Published: 19 Feb 13 09:04 CET | Print version
Online: http://www.thelocal.se/46272/20130219/
Swedes should brace for a downturn in housing prices in the face of overvalued homes and ballooning household debt, the head of Sweden's financial regulator has warned.
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| 22/05 | Accountant to Bank of ChinaSjr Ab | Stockholm |
| 22/05 | Accountant to Bank of ChinaSJR AB | Stockholm, STHM |
| 22/05 | Accounting ManagerMichael Page | Göteborg |
| 22/05 | Accounting ManagerMichael Page | Göteborg, VTG |
| 22/05 | Architectural Engineer #8409Aker Advantage | Stockholm |
| 22/05 | Business Developer/Account ManagerTransPerfect Translations | Stockholm, STHM |
| 22/05 | CAD/PDM Support EngineerEuropean Spallation Source ESS AB | SKÅ |
| 22/05 | Controller Tele2 Group ProductTele2 | Kista |
| 22/05 | Driven och social nätverkstekniker till ett av världens mest kaenda foeretagAcademic Work | Stockholm, STHM |
| 22/05 | Head of Product Control - If IndustrialIF skadeförsäkring | Stockholm, Nordic |
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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.)
A the moment very low interest rates help to keep prices affordable and high, but low interest rates won't necessarily last.
Or you could increase half a point the interest rates.
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.
What come after the big bang?
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!
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.
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