What Broke Sweden? Real Estate Bust Exposes Big Divide
At the heart of the country’s economic and social crisis is a broken housing market, which has amplified social divisions
While Sweden sits between France and Switzerland in a ranking of dollar billionaires, many poorer Swedes have seen the gap between the haves and the have-nots widen dramatically in recent times.
The central bank views real estate lending as the biggest risk in the financial system and has warned about the impact of rising household debt on everything from consumption to bankruptcies and bank losses.
It has repeatedly called for housing and tax reforms with former Governor Stefan Ingves criticizing the level of the property tax, which is among the lowest in the world.
inflation over the past 12 months, interest rate hikes and a slumping currency. The fallout has triggered Europe’s worst house price collapse and a drop in household consumption.
Even with the upheavals from the Ukraine war denting other European nations, Sweden is the only economy in the region projected to contract in 2023.
At the heart of Sweden’s woes is a dysfunctional housing market, which has not only cemented social divides, but exacerbated them.
The country’s property boom — which saw prices increase by almost 250% in the past 20 years — was fueled by razor-thin borrowing costs and a shortage of rental properties.
This lack of housing squeezed poorer families into overcrowded accommodation. And pushed others into buying — the total value of mortgages increased 459% in the two decades up to 2022.
Before the latest crisis, household debt, including mortgages and consumer debt, had soared to more than 200% of disposable income, according to the OECD’s latest data from 2021. That is double the level in Germany.
The Big Take Bloomberg 28 mars 2023
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Borttagandet av fastighestsskatten möjliggjorde dagens situation, samtidigt som den förde Reinfeldt till makten.
KD gjorde utspelet. SvD hakade på. Anders Borg såg besvärad ut, men sade att vi gör vad vi har lovat.
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