Swedish property bubble vs Australian house prices; Sweden looking at option of forcing households to amortize their mortgages to prevent debt loads rising
Oh and apologies to Sweetdish for taking this thread off topic.
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Nowhere is this criticism thrust upon us with more vigour than in the work of Ryan Heath. In his book Please Just F* Off… It’s Our Turn Now, Heath argues.
Come on Kulganis you must laugh at that - Bob Dylan beat him to that particular generational divide in 1965 "Your old road is rapidly ageing, Please get out of the new one if you can't lend your hand, For the times they are a-changing."
The difference is our generation recognized our advantages and tried to help the disadvantaged and change injustice, you guys seem to seek only selfish gains and whine about your lot.
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
Well, what do you know? Sweden is a paid up member of the global property bubble too.
I'm sure their bankers are making out like bandits too as a supine Government stands idly by.
I wonder who Skamy's equivalent is on the Swedish property site. I'm sure there are plenty of Swedish useful idiots too.
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Swedes should brace for a downturn in housing prices in the face of overvalued homes and ballooning household debt, the head of Sweden's financial regulator has warned.[/quote]
At least, their regulators tell it like it is.
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In an interview with the Bloomberg news agency, Martin Andersson, the head of Sweden's Financial Supervisory Authority (Finansinspektionen), expressed his concern about Swedes' mounting debts.
“Swedish households today are among the most indebted in Europe and we cannot have household lending that spirals out of control,” Andersson said. One tool already in place to dampen the growth of Swedish household debt is a mortgage lending ceiling introduced in 2010 which caps the amount home buyers can borrow at 85 percent of the value of the property.
Another option cited by Andersson as a way to reign in mortgage lending is hiking risk weights bank place on mortgages, meaning they would need to have more capital to secure their mortgage loans.
Riksbank head Stefan Ingves has also suggested new rules that would require Swedes to pay down the principal on their mortgages, although Andersson refused to say whether his agency would consider such a rule.
Last year, Swedes' household debt hit a record 173 percent of disposable income, well above the 135 percent level during the height of Sweden's banking crisis in the early 1990s.
According to Sweden’s National Housing Board (Boverket), Sweden is already in the midst of a housing bubble, with homes overvalued by around 20 percent. As property prices have risen 25 percent since 2006, Andersson warned of a possible "downturn" in the Swedish housing market.
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In an interview with the Bloomberg news agency, Martin Andersson, the head of Sweden's Financial Supervisory Authority (Finansinspektionen), expressed his concern about Swedes' mounting debts.
“Swedish households today are among the most indebted in Europe and we cannot have household lending that spirals out of control,” Andersson said.
One tool already in place to dampen the growth of Swedish household debt is a mortgage lending ceiling introduced in 2010 which caps the amount home buyers can borrow at 85 percent of the value of the property.
Another option cited by Andersson as a way to reign in mortgage lending is hiking risk weights bank place on mortgages, meaning they would need to have more capital to secure their mortgage loans.
Riksbank head Stefan Ingves has also suggested new rules that would require Swedes to pay down the principal on their mortgages, although Andersson refused to say whether his agency would consider such a rule.
Last year, Swedes' household debt hit a record 173 percent of disposable income, well above the 135 percent level during the height of Sweden's banking crisis in the early 1990s.
According to Sweden’s National Housing Board (Boverket), Sweden is already in the midst of a housing bubble, with homes overvalued by around 20 percent.
As property prices have risen 25 percent since 2006, Andersson warned of a possible "downturn" in the Swedish housing market.
[quote]“House prices cannot just continue upwards in eternity," he told Bloomberg.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
Wow, out of that entire post, all you could do is post about Robert Allen Zimmerman? A boomer musician who mirrored the ideals of his generation, who wrote this song because it was what his fans wanted to hear?
Your generation used to try to help abolish injustice. Now you're looking at your own retirement, you want something out of all your hard work and rather than prepare for it properly, with planning and forethought, you are making a society that requires ever increasing debt to fuel your lifestyle.
"If man is to survive, he will have learned to take a delight in the essential differences between men and between cultures. He will learn that differences in ideas and attitudes are a delight, part of life's exciting variety, not something to fear." - Gene Roddenberry
"Balloon animals are a great way to teach children that the things they love dearly, may spontaneously explode" -- Lee Camp
Well, what do you know? Sweden is a paid up member of the global property bubble too.
I'm sure their bankers are making out like bandits too as a supine Government stands idly by.
I wonder who Skamy's equivalent is on the Swedish property site. I'm sure there are plenty of Swedish useful idiots too.
Who does this asshole think he is?
Are ya talking to yourself today Veritas?
Read this if you want to understand why house prices in Sweden are stable
The empirical house price model discussed in Section 3 and the estimates of the ratios of imputed rents to rents and incomes presented in Section 4 do not indicate that Swedish house prices were overvalued to any significant degree in 2012.
Sorry to disappoint ya - bet you thought you had found a big huge property bubble hey?
Kulganis
9 Sep 2013, 06:59 PM
Wow, out of that entire post, all you could do is post about Robert Allen Zimmerman? A boomer musician who mirrored the ideals of his generation, who wrote this song because it was what his fans wanted to hear?
Your generation used to try to help abolish injustice. Now you're looking at your own retirement, you want something out of all your hard work and rather than prepare for it properly, with planning and forethought, you are making a society that requires ever increasing debt to fuel your lifestyle.
Show me this ever increasing debt. This is a myth, people borrow the same relative to income today as they did in the generation prior to the boomers. Read my sig the debt bleaters have been around since the Beatles.
Banks just do not lend people more than they can afford to pay off, have you tried to get a mortgage yet?
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
Read this if you want to understand why house prices in Sweden are stable
The empirical house price model discussed in Section 3 and the estimates...hat Swedish house prices were overvalued to any significant degree in 2012.
Sorry to disappoint ya - bet you thought you had found a big huge property bubble hey?
Alright Skamy, clearly the head of Sweden's financial regulator is an idiot. As are Bloomberg for running with the story.
Congrats; another post of sheer nonsense. you must have hit the 1000 mark by now I reckon.
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Show me this ever increasing debt. This is a myth, people borrow the same relative to income today as they did in the generation prior to the boomers. Read my sig the debt bleaters have been around since the Beatles.
Banks just do not lend people more than they can afford to pay off, have you tried to get a mortgage yet?
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
Nope, haven't tried to get a mortgage, I'm not that insane.
Our fiat monetary system requires debt to continue, if you want to take more money out of it, you have to put more debt into it.
Rising house prices require rising incomes, to pay for the larger debt required to pay for the rising house prices.
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HOW MUCH HAS DEBT INCREASED?
Based on information from the Reserve Bank of Australia, over the last 18 years the total amount of debt owed by Australian households rose almost six-fold. At September 1990 the level of household debt was almost $190 billion, increasing to around $1.1 trillion by September 2008 in real terms (i.e. adjusted to remove the effect of inflation).
Most debt was incurred to buy houses. Between 1990 and 2008, debt for investor housing increased from 11% to 27% of all household debt. Debt for owner occupier housing was consistently the largest component, ranging from 56% to 67% of debt (59% in September 2008). Other personal debt (for example credit card debt) halved as a proportion of all debt.
Relative to assets
Comparing levels of debt with assets provides context on how they have changed over time. Between September 1990 and September 2008, the ratio of total household debt to assets held by households rose from 9% to 19%. In other words, debt grew twice as fast as the total value of assets held by households. The sharp increase in the debt to asset ratio from December 2007 to September 2008 was due to a decline in the value of household assets.
Among the different types of debt, housing debt as a proportion of housing assets rose from 11% to 29%, which means overall, households have come to own a relatively smaller proportion of their houses. On the other hand, the total amount of equity households hold in their houses increased by 62%, from an average of $185,000 to $299,000 per household. Borrowing for owner-occupation and investment both contributed to the rise in housing debt. In contrast, the ratio of other personal debt to assets was around 2% in both periods.
(a) Levels of household debt have been adjusted for breaks in the series (the establishment of new banks and other changes in reporting arrangements) (b) Assets include financial assets of unincorporated enterprises and non-profit institutions serving households Source: RBA Bulletin Statistical Table B21
"If man is to survive, he will have learned to take a delight in the essential differences between men and between cultures. He will learn that differences in ideas and attitudes are a delight, part of life's exciting variety, not something to fear." - Gene Roddenberry
"Balloon animals are a great way to teach children that the things they love dearly, may spontaneously explode" -- Lee Camp
Why is it that you have this habit of posting out-of-date data Veritas? That graph is three years old and it gets regularly updated. Bias not confirmed by recent developments? Just too lazy to use Google or go to the primary sources?
Household debt/household disposable has been flat to declining for nearly 7 years now. If things were headed for crisis, they have stopped heading in that direction. All the predictions based on that curve continuing upwards from 2007 are now as worthless as a betting slip for yesterday's 10th-placed horse.
The step-up of household debt between about 1980 and 2006/7 is pretty adequately explained by:
* Women's income is now included in serviceability calculations. * The 1980s deregulation of banking meant that credit was no longer rationed to those who had been a customer of the bank for 10 years or had the right connections. * During that time the rental market has been largely privatised - rental housing was largely funded by public expenditure and now it is largely funded by private debt. * People's expectation for what mortgage interest rates would be typical over the life of the loan dropped from 10-15% down to 6-9%.
And for the time being it looks like that phase is over. It will be interesting to see what happens if we get some kind of housing boom over the next couple of years though.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
Alright Skamy, clearly the head of Sweden's financial regulator is an idiot. As are Bloomberg for running with the story.
Congrats; another post of sheer nonsense. you must have hit the 1000 mark by now I reckon.
How many times? Clown.
You are the clown as usual, Veritas, you just never seem to understand more complex issues. Now you are name calling and all angry as you got caught out spruiking false data for Sweden. This is the real chart and you can see owner occupier debt rising sustainably as incomes allow and it has been flat for 6 or 7 years
These are the more relevant charts that show how easily manageable our borrowing is compared to our wealth and incomes
But you weep when you see these because you cannot sustain your cheap house dreaming.
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
Keep posting your cherry picked crap here skamy, day after day after day, you know that eventually with sheer persistence we will all become believers in the magical wealth multiplying effect of property.
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But you weep when you see these because you cannot sustain your cheap house dreaming.
The irony of all this of course is that it's your myopic stupidity that does the most to convince me that the australian housing market and the financial institutions that fund it will keel over sooner that I expect - way more so than any of the cheap house dreamers from macro business that you bleat about so incessantly.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness. "Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
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