For a "long" time approx. 15 years now, the Swedish housing market has don nothing but gone up.
Stockholm is now 2.and in the world after Toronto!
The underlying fundamentals for this state is not hard to understand. A constant falling interest rate (negative for the time being), and a firm export industry. An Industry that is exporting both commodity's and high tech products. This has off course provides a large part of the population with working opportunities.
A steaming Swedish krona (our currency) has bin knocked down by QE:s not mainly to stimulate the economy, but rather to fight the currency from strengthening towards other currency's, such as the usd, and euro. This is according to our central bank necessary to avoid the exports from falling due to increased price. A no brainier? Switzerland took an other way, and kept the value of there currency out of QE:s, until they became forced to go the same way as Sweden did with out blinking. Why? capital loves a strong currency's. What is wrong with the world. The country makes an effort to produce and make good products, the capital sees it an rush for the benefits of the gains of the output, (raising currency) why isn't it the other way around, race to the top! become best and make innovations, good effective products etc. etc. The answer spells FIAT currency.
Back to the topic. As Sweden was "forced" to participate in this stupid money printing low rate craze, the Swedish people began to buy houses from each other like crazy. With gain of staggering amounts every year.
You see, 15 years ago something happen. the government decided to cut the real estate tax. This was the start signal, for the race in the housing market. the interest rate started to sink as discussed above. this prescription calls disaster. As the cheep money started to rush in to the most essential asset class in Sweden, real estate (Sweden is a cold place)
Situation now: Government has realized the we need to have regulations on banks, and hove much they can lend to house buyers. implementing: forced amortization, down payment and max dept vs. income. My dear countrymen that recently jumped on the wagon are doomed to live there lives in slavery. You see the Industry refused to raise the pay check. the former government helped the industry out with that. They lowered the income tax. making people feel like the had raise.
We are now at the top of a economic cycle, soon to be entering a downturn.
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