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Danish economist givens the verdict on Swedish houses Prices: They are 15 percent overvalued Norway

Tuesday, 11 June 2013
Danish economist identifies that Swedish house prices are over valued by 15percent. This reflects what have been said and written about the Swedish house prices situation now for the past two to three years by various home and foreign organisations.
According to Peter Birch Sørensen Professor of Economics at Copenhagen
University, in a report presented on Monday based on the background report he wrote
to the Fiscal Policy Council, he warns that Swedish housing policy should be examined seriously.
"Housing prices are about 15 percent above the fundamental level," he said, noting that there is considerable uncertainty in the estimates of fundamentally motivated home prices.

He further said that the actual house price moves against the fundamentally justified levels over time, but he pointed out that this happens slowly and that house prices in "long periods" may differ from the fundamentally justified level.

Peter Birch Sorensen also added that he, the report did not take account of three factors that could have lifted the fundamentally justified house prices: Financial innovation in housing finance with increased assets to
loans and longer amortization periods, the reduction in property tax and the move has happened to major cities.

He also said that it is not sustainable to the Swedish real house prices would continue to increase by 6 percent per year, as they have done since the mid -1990s.
"In the long run, house prices should not rise more than real income, which increases substantially less than 6 percent per year, "said Peter Birch Sorensen.

Peter Englund, professor at the Stockholm School of Economics, said in a statement in relation to the Swedish house prices that today house prices is probably a little high relative to fundamentals.

However, it is very low precision in accurate estimates of the size of this overvaluation is. He also pointed out that the supply of housing is low, with weak construction.
By Scancomark.com Team

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