Swedish household wealth fell in 2011

Wednesday, 21 March 2012
Falling home prices, higher interest rates and rising debt has eroded the Swedish people’s wealth. Last year it decreased by as much as Skr514 billion.

“The full year of 2011 was a really bad year,” said SEB's private economic analysts Gunilla Nyström when she presented the Bank's latest savings survey on Wednesday.

The debt ratio, that is, debt relative to assets, will remain at 28 percent, a fairly satisfactory level according to Nystrom.

But a large proportion of the total wealth is in a small number, so the ordinary household's balance sheet looks hardly like this.
And household wealth, the vast majority concentrated in the homes and retirement savings. A very small part in free savings, says Nystrom.

During the fourth quarter Swedish household net worth, reduced compared to the third quarter, marginally, or by Skr7 billion to Skr7107 billion. The value of homes went under the central bank's calculations, down by 3.4 percent during the quarter.

“And I think there will be a cool housing market for a while. But there are signs pointing in another direction, according to various indices such as Valuguards housing index, Mäklarstatistiks figures and our own boprisindikator (Real Estate indicator). More households seem to think that the housing market has bottomed out but there are still signs that it will take a while for that to happen.

New savings was negative during the quarter, because this year's allocation went to the premium pension deduction. Meanwhile, household debt growth is now the lowest since the third quarter of 1997 when it was 4.9 percent. The annual growth rate of lending was low in the fourth quarter last year to 5.0 percent

Behind it lies the cooler housing market, a general concern for the economy and higher interest rates. But the mortgage ceiling and banks' increasing demands for repayments may have dampened the desire of households to take out new loans.

During the last quarter, households also move their savings from mutual funds to bank account.

About 2012 though, that will “depends on how the market goes and how home prices develop. We have more money in their homes, but on the other hand, the stock market may move much more than the housing market. "

"Right now we have some positive signals with regard house prices than in the second half of 2011. But it is too early to draw any conclusions from it. "

SEB say that bopriserna or house prices will continue to drop for a while and those prices will fall between 10-15 percent from the peak in 2011.
By Scancomark.se Team

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