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 Post subject: Re: Swedish House Prices: The Latest Bubble Warning
PostPosted: Mon Sep 16, 2013 10:29 am 
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BoyRacer wrote:
Sweden a safe haven for those who prefer bricks and mortar - Tara Fitzsimons -> http://www.independent.ie/business/comm ... 73072.html


Another case of the unerring Irish eye for the worst possible property investment at the worst possible time? Anecdotal, but a Swedish bloke I've corresponded with on the subject with says:

"...some new measures that are discussed to bring down those 100/170 year housing-loan periods in Sweden. There are two alternatives discussed:

1. All mortgages are to be paid down to 60% of the initial purchase price within 20 years.

2. Straight payment of the loan over 60 years.

The second proposal is way more dramatic. It might not seem that dramatic for people who live in countries where, say, 30 year mortgages are the norm but here it is.

The opponents also agree that we "have to do something" but want to leave it up to the banks to decide with each customer - in theory because different customers have so different economics. The problle with that IMO is that I trust the banks about as much as a rattle snake in my bed to do the right thing.

Clearly it's a tightrope they're walking here. If they suddenly change the rules too much they will without doubt cause a crash. If they do nothing the bubble might continue to inflate ane the crash will be even worse. They're trying to create a situation where new lending doesn't grow and where the present stock of loans will remain solvent. I have little faith that they'll succeed with that.

But I do think it'll take two-three years or so before the housing market in Sweden crashes. (best bet)"

EDIT: I ran the above article by him ... he had a good guffaw at this quote: ""Swedish banks are notoriously risk-averse, so their support supplies positive reinforcement."

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 Post subject: Re: Swedish House Prices: The Latest Bubble Warning
PostPosted: Sat Sep 21, 2013 3:56 pm 
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There's an election in the spring, the current government are probably trying to keep the bubble plodding along until after then.

Quote:
""Swedish banks are notoriously risk-averse, so their support supplies positive reinforcement."


This is indeed ridiculous, minimum research and the person who wrote that article would know that Swedish banks brought down the Swedish economy in the early 90s. So Swedish banks are notorious idiots.


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 Post subject: Re: Swedish House Prices: The Latest Bubble Warning
PostPosted: Sat Sep 21, 2013 4:02 pm 
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blåbärssoppa wrote:
There's an election in the spring, the current government are probably trying to keep the bubble plodding along until after then.

Quote:
""Swedish banks are notoriously risk-averse, so their support supplies positive reinforcement."


This is indeed ridiculous, minimum research and the person who wrote that article would know that Swedish banks brought down the Swedish economy in the early 90s. So Swedish banks are notorious idiots.

Even more recently than that, they were caught with their pants down in the Baltics... so not just 'former' management, but the current ones too - it speaks of institutional idoiocy, much like AIB...

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 Post subject: Re: Swedish House Prices: The Latest Bubble Warning
PostPosted: Sat Sep 21, 2013 4:32 pm 
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blåbärssoppa wrote:
There's an election in the spring, the current government are probably trying to keep the bubble plodding along until after then.

Quote:
""Swedish banks are notoriously risk-averse, so their support supplies positive reinforcement."


This is indeed ridiculous, minimum research and the person who wrote that article would know that Swedish banks brought down the Swedish economy in the early 90s. So Swedish banks are notorious idiots.


Or notoriously clever since they know the Swedish government will never let them fail and is on tap with a bailout when needs be.

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 Post subject: Re: Swedish House Prices: The Latest Bubble Warning
PostPosted: Sat Sep 21, 2013 10:23 pm 
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BoyRacer wrote:
Sweden a safe haven for those who prefer bricks and mortar - Tara Fitzsimons -> http://www.independent.ie/business/comm ... 73072.html

Serious question, but aren't there rules for news articles to be somewhat fair and balanced? Was this marked as a commercial feature in the newspaper? Are there sanctions for not doing so?


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 Post subject: Re: Swedish House Prices: The Latest Bubble Warning
PostPosted: Sat Sep 21, 2013 10:43 pm 
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TheEmigrant wrote:
BoyRacer wrote:
Sweden a safe haven for those who prefer bricks and mortar - Tara Fitzsimons -> http://www.independent.ie/business/comm ... 73072.html

Serious question, but aren't there rules for news articles to be somewhat fair and balanced? Was this marked as a commercial feature in the newspaper? Are there sanctions for not doing so?


Couldn't agree more. That's wildly one-sided and advisory.

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 Post subject: Re: Swedish House Prices: The Latest Bubble Warning
PostPosted: Sun Sep 22, 2013 8:31 pm 
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Mossy_Heneberry wrote:
blåbärssoppa wrote:
There's an election in the spring, the current government are probably trying to keep the bubble plodding along until after then.

Quote:
""Swedish banks are notoriously risk-averse, so their support supplies positive reinforcement."


This is indeed ridiculous, minimum research and the person who wrote that article would know that Swedish banks brought down the Swedish economy in the early 90s. So Swedish banks are notorious idiots.


Or notoriously clever since they know the Swedish government will never let them fail and is on tap with a bailout when needs be.


Very true, the Swedish government is very much in bed with Swedish banks and developers, no matter what party is in power. Just look at what the Socialdemokraterna, supposed friend of the people, did to Norrmalm in Stockholm in the 60s and 70s. Tore the whole place down and replaced it with concrete department stores. You'd think the place was firebombed in the war. Same happened to cities all over Sweden. Malmö got gutted out something terrible as well.


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 Post subject: Re: Swedish House Prices: The Latest Bubble Warning
PostPosted: Thu Oct 10, 2013 8:39 am 
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Quote:
Swedish Bubble Concern Grows With Soaring Home Prices

Apartment prices rose 14 percent in the 12 months through August after more than doubling since 2000, sending household debt to record levels and prompting a warning from the International Monetary Fund that the country needs to take measures to prevent consumer debt and housing costs from spiraling out of control.

More...

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 Post subject: Re: Swedish House Prices: The Latest Bubble Warning
PostPosted: Wed Dec 11, 2013 6:53 am 
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Swedish Housing Surges to Unsafe Value as Debt Soars - -> http://www.bloomberg.com/news/2013-12-1 ... soars.html

Quote:
Listed for 3.995 million kronor ($623,000), it was within their budget -- barely. Two other couples were interested, and a bidding war ensued. Phone calls and text messages shot back and forth between bidders and broker as the price spiraled upward in leaps of 10,000, 50,000 and 100,000 kronor.
“We had a maximum amount we wanted to pay, and we passed it three times,” says Andersson, 28, who works in marketing and public relations.
Twenty-four hours later, she and her boyfriend, Christofer Ranman, an account manager for a telecommunications company, emerged as the winning buyers, paying 4.3 million kronor.

there is more



Will the Swedes blow-up again? -> http://www.macrobusiness.com.au/2013/12 ... -up-again/


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 Post subject: Re: Swedish House Prices: The Latest Bubble Warning
PostPosted: Tue Aug 26, 2014 11:26 am 
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Reuters wrote:
Mum's the word on soaring Swedish household debt as poll nears

  • Four in 10 mortgage borrowers not repaying capital
  • IMF says financial instability an increasing concern
  • Politicians steer clear of remedies ahead of Sept. 14 poll

More...

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 Post subject: Re: Swedish House Prices: The Latest Bubble Warning
PostPosted: Tue Oct 28, 2014 9:16 pm 
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How low can you go? Sweden cuts interest rates to zero - -> http://www.telegraph.co.uk/finance/1119 ... -zero.html

Quote:
The world's oldest central bank has slashed interest rates to a record low of 0pc as it battles to ward off deflation.
Sweden's Riksbank decided to cut its benchmark "repo rate" by 25 basis points from 0.25pc at this month's monetary policy meeting, following three previous rate cuts this year. The decision was not expected by polled analysts who forecast the benchmark rate to be lowered to 0.1pc.
The move is designed to increase lending and push up prices and reflects worries about the real threat of deflation which have now gripped the economy.

there is more


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 Post subject: Re: Swedish House Prices: The Latest Bubble Warning
PostPosted: Wed Oct 29, 2014 3:00 am 
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Swedish apartments, 1970-2014, whole country average, nominal price index with 1970 = 100.
KPI = Consumer Price Index, BNP = Gross Domestic Product, Disponibel inkomst = disposable income.

Image

Someone said we should have emulated Sweden after their early 1990s banking crisis ... well maybe we did -- they seem to have started stoking their next bubble immediately. The 90s rise and fall looks tame compared to now. The only minor blips in continuously rising prices since 1996 were the 2008 financial crisis, and 2011 Greek crisis. According to the blog, price rises for urban centres is even scarier looking.

From Cornucopia blog (Google Translate), one of the most popular Swedish economics blogs. Looks like a Swedish Property Pin, complete with Swedish "Market cycle of emotions" graph.

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 Post subject: Re: Swedish House Prices: The Latest Bubble Warning
PostPosted: Wed Oct 29, 2014 11:29 am 
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The Swedish property market and in particular that of Stockholm are in worse shape than that of Ireland and Dublin. But we are not that far behind when comparing Stockholm with Dublin. Government policies and inaction mean that what is happening in Stockholm will happen in Dublin in the next year or so, but without (so far) the added problems and the black market associated with a failed rent control policy. The factors affecting this and their consequences include:

• Increasing population leading to increased demand for residential property
• immigration of skilled workers experiencing severe difficulty in being able to rent suitable residential property leading to restrictions in employment growth and/or rent increases caused by companies subsidising rents for new immigrant employees further increasing rents and/or companies moving jobs elsewhere
• Increased building regulations including social housing levies that add costs to property construction leading to reduced construction activity
• A stagnant property market where large numbers of defaulters can live in properties without making any payments and a legal system and Central Bank policies that enable long delays in repossessions
• Proposed residential property lending restrictions in Loan To Value/Loan to Income lending ratios that will increase rental demand and rents
• A tax and regulatory system that penalises landlords especially the amateur landlord, many of whom are looking to exit the market and thus further reduce supply
• Greater concentration of low income earners in a reduced number of areas leading to an increase in crime and the creation of ghettos

These are only some of the direct effects. The indirect ones could include:

• Reduced consumer spending because of greater saving activity because of reduced loan LTV
• Increased movement of people to lower cost dormitory towns outside Dublin leading to increased property prices and increased commuting activity leading to greater traffic problems

To this poisonous mix, add the populist, knee-jerk, superficial demands for rent control.

The Swedish Housing Crisis Committee produced a report on their views of the state of the Swedish property market - http://www.bokriskommitten.se/wp-conten ... ng_web.pdf.

These are some extracts from this:

Quote:
On this ideal housing market, the process from construction idea to ready to move into flat is also significantly faster. At present, it takes approximately six years in the Stockholm Region; on a well-functioning market, the goal should be a maximum of two years.


Quote:
The Swedish housing market is currently far from the ideal vision sketched out in the previous chapter. Construction has been low for several years, and a high proportion of Sweden’s municipalities are reporting housing shortages. The existing housing stock is being used inefficiently. The shortage of rental flats is particularly large, which contributes to the prices of houses and tenant-owner flats in attractive areas being pressed up. Household debt is increasing. The housing waiting lists are long. Many young people have trouble even getting into the housing market, and Swedish companies have trouble getting housing for foreign experts and employees only living in our country temporarily. It is expensive and a hassle to create functioning chains on the housing market. The black market is extensive, although difficult to quantify.


Quote:
The number of municipalities reporting a shortage is also increasing; in 2013, 246 municipalities, or 85 percent, reported a shortage of rental flats. The year before, the number was 242 municipalities.


Quote:
On 31 December 2013, there were 431,144 people on the housing waiting list in Stockholm. The increase was 32,000 people or eight percent last year. This is to be compared with the fact that the Stockholm Housing Service finds flats for only about 10,000 households per year.


Quote:
One argument for rental control that is often raised is that we thus can avoid social housing – special houses or areas for people with subsidised housing. Social housing exists in several countries (see next chapter), but Swedish politics has rejected this type of policy as segregating and stigmatising. Such specially designed housing areas therefore do not exist on paper in Sweden. But in reality, the combination of rent control and a poorly functioning labour market has resulted in certain areas in the suburbs of the big cities becoming environments with a high number of unemployed people. Reliance on government assistance is high and social security benefits are common. Social housing has in this sense de facto come in through the back door, as a by-product of housing segregation and high unemployment.

The conclusion is that rent control has not achieved its goals. It has been unable to stop segregation with respect to income – while possibly aggravating segregation with respect to origin. First and second generation immigrants are put at a disadvantage. Rent control thus does not achieve the goal often cited as the main argument for its existence.


Quote:
The housing shortage in growing regions has become a major economic problem. All sectors are having greater difficulty recruiting staff. The public sector has recruiting problems due to the housing shortage, in sectors such as the healthcare sector. Recruiting foreign experts is particularly problematic. In a recent investigation, as much as 70 percent of foreign expats in Stockholm state that it has been very difficult to find housing; another 14 percent answered that it was difficult. The housing shortage was thus the biggest obstacle for qualified foreign labour to overcome.


Quote:
The price signals coming from the increased demand which should have led to increased construction are being blocked:

• Rent control prevents the price signals from getting through to the supply of flats. It blocks chains of moves and slows down mobility. The recent attempt to loosen up regulations with rents better adapted to market conditions in newly built properties has not been very successful (see next chapter).

• Rent control is also the main reason for the large number of conversions from rental flat to tenant-owner flat. A property will be worth much more if its flats become tenant-owner flats than if they remain rental flats, because the controlled rent keeps revenues down. It is therefore more profitable for the property owner to convert them and sell them as tenant-owner flats.


Quote:
Rent control creates lock-in effects and shuts the door on those who do not have contacts. High and perpetual capital gains taxes inhibit mobility on the market for tenant-owner flats and houses. A complex and drawn-out zoning process is costly and weakens competition. Joint planning between housing construction and infrastructure is insufficient.


The Economic Council of Sweden organised a conference with leading experts in the area of rent regulation on November 8, 2002. Volume 10 of the Swedish Economic Policy Review contains the papers from
the conference – see http://www.government.se/sb/d/574/a/95429.

Despite happening 12 years ago, the topic of rent control in Sweden has been left unaddressed.


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 Post subject: Re: Swedish House Prices: The Latest Bubble Warning
PostPosted: Mon Nov 17, 2014 8:15 pm 
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A Swedish acquaintance reckons the government is trying to engineer a soft landing to the housing market. The market has gone beyond the point where it can be left alone, with 40% of mortgage holders paying no capital at all off loans, and the economy -- nett of house prices -- in deflation. A 15% deposit requirement is being considered to reduce riskiness of new loans, but any impact on house prices will itself be a risk to the banks. Existing mortgage holders above a certain LTV will also be forced to pay down some capital. I wish them the best, but to quote Morgan Kelly, "housing bubbles never end with soft landings".

Sweden to tackle soaring household debt with new mortgage rule

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 Post subject: Re: Swedish House Prices: The Latest Bubble Warning
PostPosted: Thu Mar 24, 2016 10:24 pm 
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http://www.telegraph.co.uk/personal-ban ... age-is-14/

Quote:
Sweden cuts maximum mortgage term to 105 years (the average is 140)


..pardon? :nin

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For future reference, a 'soft landing' theorem:
06/2007: Central Bank predicts soft landing for housing
http://www.independent.ie/business/iris ... 96858.html
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