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Swedes don’t care very much about falling house prices – some see it as a blessing

Wednesday, 16 November 2011
Falling house prices may be a cause for concern for the national economy but the Swede doesn’t cares about it.
Instead it is seen as an opportunity to trade up or to enter the housing market, according to a survey by the Real Estate Agency, Fastighetsbyrån.

Some worry, however, that that it will make it more difficult to increase their borrowing. But a majority, 51 percent, do not care.

According to the latest figures from the Swedish Real Estate Broker Association,  prices of houses in the country declined by 3 percent over the past three months.

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Condominium prices have certainly gone up in the country as a whole, but fell in the metropolitan regions. In central Stockholm, for example, prices fell by 3 percent in October.

This seems to have instead been a blessing as we reported yesterday. The Swedish housing market has in the past two years seen its prices rise exponentially such that many people and organisations have seen the Swedish housing market as a long term risk for its economy if nothing is done to cool the exorbitant house price rise. International organisation has deemed the Swedish house prices as over valued and the government decided to implement a real estate borrowing cap for would be home buyers. Today if some one want to buy a house in Sweden, the real estate ceiling prescribe that that person pays 20 percent of the house price before seeking a mortgage.

The net step was also the central bank which persistent kept interest rate up so as to deter borrowing for real estate purposes as it was determined that it was a major factor that pushed Swedish house hold debt to a new height.

These two factor plus the worrying market uncertainties have means that house prices have started falling but still households feel that the fall is not fact enough. 
This is why for now so few are worries of the falling prices and this also not surprising to the ReaEstate Agency official Lars-Erik Nykvist:

“People are so well-informed and knowledgeable about important decision such as that a home business. They are aware of the lack of interest rate increases. They realize that if they may go down slightly in price when they sell as is also for the home they might be buying which may also go down.”

Few of those surveyed believe a housing bubble. Only 10 percent believe in a strong and rapid fall in prices in the housing market.

“It is clear that we will not have the same rising prices as we have had for several years. But few believe in the strong fall in prices. I fully share this view, saying Nykvist.
By Scancomark.se Team




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