Market News / Real Estate and Mortgages
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Swedish Real estate sales dives spectacularlySunday, 08 April 2012
Sales of newly built single-family homes in Sweden have fallen drastically in the most recent years, with many attributing the fall to the worst crisis in the sector ever.
Mortgage ceiling set recently by the government to limit the runaway prices of Swedish house prices which was already accounted as over valued is believed to be one of causes.
Market authorities here believe that the mortgage ceiling was introduced too quickly. 10 000 newly built houses were sold in Sweden four years ago. Today the figure is 4,000 and only in the last year, sales have halved.
Many companies have announced financial difficulties or even gone bankrupt because of the decline in sales. During the crisis the Swedish housing market fared quite well and through the crisis, but since much talks of the Swedish house prices being over valued and how mortgages will rise to more than 100 percent of earned salaries such that, mortgage owners would be forced to pay their mortgages up till 150 years, the government had to do something.
The rise in the house prices was seen to be too artificial as a new philosophy had entered the Swedish consumer - to own a house more than renting. This new philosophy means that real estate agents had to exploit the situation and up their prices which did not reflect the earning of mortgage takers. This was seem as a crisis in the making shouted by the IMF, EU, various credit rating agencies as well as various Swedish real estate analysts,
The Swedish Real estate entrepreneurs' trade association, TMF, has now confirm that they are in a crisis as the Swedes review their house owning philosophy and stop buying.
The Swedish household debt which is tied to the Swedish housing market is also blamed for the fall. Swedish household debt is one of the highest in the Europe compared to other countries and this has made the government feel disturbed that similar trend in places such as the UK and the USA as well as their own lesson of the 1990s house crash has means that the government had to do something to reduce the likely similar effect in the future.
But one major driver is attributed to the crisis in Europe, banks’ profiteering as well as higher interest rates at home.
By Scancomark.se Team
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