House prices 'not a worry'
TT/The Local · 30 May 2007, 10:48
Published: 30 May 2007 10:48 GMT+02:00
"At the moment I am not particularly worried that prices will lead to problems with financial stability. But this is not a trend that is sustainable in the long term," Lars Nyberg said in a speech in Stockholm on Wednesday.
Nyberg added that the Riksbank would pursue cautious policies.
"House prices and household debt cannot in the long term grow faster than household income. This risks causing imbalances to build up, which could be costly for the economy. We at the Riksbank are therefore vigilant regarding future developments," he said.
"If households choose to use the amount they save from the abolition of the tax to take a bigger mortgage, it is likely that it will lead to a faster increase in prices than would otherwise have been the case. If the increased possibilities to borrow were to have their full effect on house prices, the reform could increase prices by about five percent," he said.