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No rise in housing prices in Stockholm
Monday, 14 December 2015 11:32

The housing prices in Stockholm stood still in the month of November, after having increased with 20 percent over the past year. The rapid increase of housing prices in Sweden, and especially in the big cities of Stockholm, Gothenburg and Malmö, can be a sign of a housing bubble warns experts.

The Swedish National Bank, the Riksbank, has currently set it's interest rate at a negative. This means that borrowing Money is increadibly cheap. It's possible to get mortgages of less than 1,5% per year. Interest rates are further tax deductable with 30% up to 100 000 kronor, making it even cheaper. This - together with tax Cuts on real estate and tax breaks for Construction and improvements of dwellings, had make the housing prices in the Scandinavian country to sky rocket. You can today borrow 4 times more Money for the same cost, than before the Financial crisis.

Apart from the cheap Money, production of housing has not kept up with the demand. Even though the number of newly built apartments and houses in Stockholm is the highest in a long time, it's still to few to keep up with the population growth. Stockholm is, together with Oslo and Copenhagen, the fastest growing Capitals in Europe.

Many experts have been warning for a housing bubble, while none of the governmental authorities have managed to take any action against what many beleive is a housing bubble. The current center-left government refuses to take any actions, and blames the previous center-right government for not acting. The Riksbank says it's not their responsability, and the Financial Inspection claims it's not their either. However most agree that the price increases are not sustainable, and that there most probably is a housing bubble.

Last time Sweden has a housing bubble that burst, in the early 1990:s, housing prices in Stockholm Went down with 40% and created a major recession. Now many fear that the lack of increase of housing prices in November, is the first signs of the bubble is starting to burst.