The Shock of Sweden's Housing Market Is Hitting the Country's Currency
There are tons of things inflating house prices. The most important for Sweden are<p>- Deduction of interest expenses from income tax.<p>- Too long mortgages (100 years or more) means nominal prices are high which add to the risk<p>- Historically big mortgages (90, 100 or even 110% of the cost could be financed - yes 
negativev down payments existed in the early 2000&#x27;s).<p>- Rent control of almost all flats, meaning no one will build places to rent, only to buy.<p>- Extremely low interest rates as the central bank refuses to look at housing costs and interest rates when aiming for the inflation target.<p>This is the recipe for disaster. Now, it&#x27;s not ALL doom and gloom, a lot has actually improved. Down payments have been 15-25% for some time now, mortgages are no longer infinite, and banks are using max-multiple-of-household-income caps (typically 4-5x) to limit lending. I think the situation now is a bit brighter than it would have been if we had been hit by a big correction in 2008 (which we were not). Many would welcome a controlled price correction (say 10-15%), and it IS expected since all the above changes have yet NOT changed the prices downward, even though the pool of prospective buyers gets smaller and smaller the more restrictive lenders are. It would be very welcome to see the correction <i>now</i> that both domestic and global economy is decent, interest rates are low etc.