Monday, April 18, 2011

Sweden, Bubble Arguments Are the Same Everywhere You Go

The actual amortization periods for new Swedish home loans is now about 100 years for houses and nearly 200 years for tenant-owner apartments.

I just had to lead with that. You inherit your house outright from your great-grandparents, I guess. No great wonder the Swedes build to last.

The real bubble trouble is actually not the absolute household debt levels (Sweden is still below Denmark, thank you) but the recent sharp growth.

Swedish housing 'bubble' about to burst: agency
"Based on the fundamentals - such as income development and other factors - house prices are at unsustainable levels. We estimate that prices are around 20 percent above what they should be," Bengt Hansson said.

20%? Pikers.

You can read the whole thing. You could make a mad lib out of the article's key arguments and substitute any other bubble country.

Why did I look at Sweden today? Interesting story about that. I was looking at a list of countries' reserve requirements. The four countries without a reserve requirement: Australia, Canada, New Zealand, and Sweden. Coincidence?

Next up, the countries with a mere 2% reserve requirement. Hm, I wonder what's happening in South Africa . . . ?

Holy housing bubbles . . .
from clicks and mortar

1 comment:

jesse said...

"The four countries without a reserve requirement"

These countries control money supply through capital ratios which is very similar to a reserve ratio like in China or the US. We need not look further to see that reserve ratios do not prevent housing bubbles.