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'Sweden next in line for housing market crash'

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'Sweden next in line for housing market crash'
'Sweden next in line for housing market crash'
16:42 CEST+02:00
Sweden tops a list of countries that risk suffering a housing market crash, Germany's Commerzbank has warned, citing the slackening off of Swedish property prices as a harbinger of a potential downswing.

The bank has analyzed housing prices across Europe and looked at boom-bust cycles in the US in the past 15 years.

"The property booms in Finland and in Sweden seem to be nearing their end, and we should soon see a price correction," Commerzbank said in a statement on Friday, according to the NyhetDirect news service.

"Both countries have seen housing prices increase rapidly over the past ten years, but that increase has begun to level out since the beginning of 2010."

Commerzbank said the slowing down of property-price hikes often precedes a downturn in housing prices.

The bank also noted the high levels of household debt and prices in relation to rents are moving laterally, but that the levels are far higher than long-term trends.

"The drop in housing investments is already affecting the economies in both countries, a process that will probably accelerate when house prices start to fall," wrote Commerzbank.

Europe-wide, property prices were already sinking in France, Spain, the Netherlands and Slovenia, with indications that prices will continue to drop. Commerzbank said the level of house-hold indebtedness and prices compared to rents in these countries were far above the level expected in the long-term.

Danish and British property prices, meanwhile, had emerged from the bust and were slowly climbing, while Ireland was in a stabilizing phase.

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