The Quotes are Powered By Forexpros, the Forex, Futures, and Stock Markets Portal.





Market News
    Advertisement

  

Pressing problems in the Swedish real estate sector could spell problems to the perceived balanced economy

Wednesday, 28 November 2012
There's a general uncertainty in the Swedish real estate market, and if information from various media reports should be taken seriously then something has to be dome otherwise the Swedish economy could struggle in the nearest future.

One driver for this is that selling times for houses have risen sharply in the sector and the fear is that house prices should not start falling. Should anything of such magnitude starts, then there would be problems to the household economies.
According to figures from the Swedish Property association, Bofrämjandets the Swedish average house takes almost 100 days to sell. This is pushing the government to reconsider its policy on strict real estate ceiling, which means that buyers were required to pay more for a house and take lower mortgages.

The strict real estate ceiling was introduced aimed at reducing the amount of debts taken by homeowners so as to reduce the household debts that was growing so fast.

According to Swedish business daily, Dagens Industri, the government sees plenty of problems in the housing market and are planning prising open then tightened mortgage cap.

The increased delays in sales are very popular in major cities, which had been seeing impressive sales even when sales in smaller towns had been talking long. Now in smaller towns, it takes up to six to nine months to make sales and that is not considered unusual, according to analysts cited in the report.

In a seminar organized by a Bofrämjandet attended by Ulf Perbo, the State Secretary at the Ministry of Social Affairs, a long list of problems affecting the sector was presented for address.
Among them, the Government is concerned about the the huge household debt, unfair price trends, (Swedish houses are overvalued) housing shortages, black market leases and high construction costs.

"We have a shortage of housing in growth regions, students do not have homes as well as lack of adequate housing for the elderly, "said Ulf Perbo to Dagens Industri.

Talking about the mortgage ceiling introduced two years ago, Ulf Perbo acknowledged that the government could take the mortgage ceiling away for it had kept a large groups from entering the housing market.

Also this ceiling received massive criticism when it was introduced. But he pointed that that "perhaps it tightened up on household debt which could have continues to increase rapidly."

One thing to consider is whether it is possible to exempt new construction from the mortgage ceiling, according to Ulf Perbo . "The real estate industry has been hit very hard and highlights that the mortgage cap has been a determining factor."
Despite the impressive look of the Swedish economy, the real estate sector has been a particular point of worry. The over valued nature of Swedish houses means that home owners in Sweden have been heavily saddled with debts mostly from mortgages, as such, Swedish household debts have been identified by the OECD, credit rating agencies  and the European Commission as something that stands as a risk to the Swedish economy.
By Scancomark.com Team

 We welcome your contribution. Did you find anything wrong with this article? Do you want to contribute to our    news network? Do have a news tip or assist us with a correction? 

Print Friendly and PDF