Swedish house prices among the overvalued in the world - Economist


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Monday, 11 July 2011
The issue of Swedish over valued house pries has been raised again. This time by the respectable British based economic news magazine, the Economist. It puts Sweden among the countries with the world's most overvalued housing markets. Only Hong Kong, Australia and France are considered to have more inflated house prices described as price levels dangerously high.

The most overvalued housing market is Hong Kong. This understandable that it is a very tinny place with very high competition for space. In April this year, house prices have risen by almost 24 percent over the same month last year.

The magazine's house price index shows that prices in the Swedish housing market follow the French. But the French house prices are judged to be more overvalued and still in a strong position for upswi

The Swedish house prices rose just 2.2 percent during the last twelve months, compared with a rise of 10.7 percent over last year.

The U.S. house bubble that bust and caused the global financial crisis in autumn 2008 have gradually lost traction for several years. Today homes in several parts of the country are considered to be greatly undervalued.

The U.S. house prices fell by as much as five percent on average during the first quarter compared to same period last year, which was the largest decline in the world after the crisis-hit Ireland.

The Economist makes its calculations based on both nominal house prices and real prices adjusted for inflation, and house prices relative to household income levels and banks' interest rates.

This is not the first time the issue of Swedish house prices being over valued has been raised. We have trumptted the issue here on this network and the IMF as well as the European Union have talked about Sweden walking on a time bomb because of its house prices being too over valued. This could be the reason behind the persiste interest rate hikes as well as the new mortgage ceiling imposed by the government. We wait to see how price falls will affect those who already own homes and are paying  a high interest rates now.
By Team

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