Swedish property bubble vs Australian house prices; Sweden looking at option of forcing households to amortize their mortgages to prevent debt loads rising
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.
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.
Mate by far and away every sensible person in the world knows that property is a great way to build wealth and future prosperity.
It is just a few two bit internet sites who have brainwash a few angry older genYs and younger gen X kids who missed the growth in the 2000's and hoped to get a bargain from a housing crash.
The crash came and went but these greedy few wanted more and did not even take the chance to snap up a bargain when they were available.
So where are these sad young people now? All of them are falling behind their property purchasing peers who are currently seeing some great capital gains, especially in Sydney. They can see this and they watch indicator after indicator showing a recovery but they see none of it, they instead hang on to any outliers that might show a tiny bit of bad news, eg the ridiculous outdated claims of, still extremely low, mortgage default rates, or increases in debt that ended 7 years ago which are still very low compared to wealth. In short they have become blind and deaf in their real world because they will not let go of the doom and gloomers fantasy house crash and cheap homes for all the non property owners.
You have your soul all in a torpor for no good reason at all young man. It certainly looks like the sun is again going to shine on the economy for the man and woman in the street again for at least a good few years now.
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.
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
What false data would that be Clown?
The opinion of Sweden's chief financial regulator as reported by Bloomberg?
Why don't you tell us more about how there was no property bubble in Ireland. That's entertaining.
Veritas
10 Sep 2013, 12:33 PM
Quote:
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
What false data would that be Clown?
The opinion of Sweden's chief financial regulator as reported by Bloomberg?
Why don't you tell us more about how there was no property bubble in Ireland. That's entertaining.
Quote:
Mate by far and away every sensible person in the world knows that property is a great way to build wealth and future prosperity.
So Skamy how are all those home purchasers in Spain and Ireland going who bought at the height of the bubble?
Your stupidity is boundless.
Quote:
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.
Tell me something I don't know? You just described the neoliberal two step ( lend the proles more money to buy houses, inflate prices and massively increase bank profits as the debt monkeys pay much bigger mortgages)
The debt is sustainable providing the underlying economy remains robust. As soon, as is inevitable, the economy enters a recessionary period high levels of household debt become a major drag on the economy as the deleveraging cycle kicks in. That is one of the key lessons of the post GFC world. And most of that debt is secured against the most illiquid asset of all-housing.
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
The opinion of Sweden's chief financial regulator as reported by Bloomberg?
Why don't you tell us more about how there was no property bubble in Ireland. That's entertaining.
So Skamy how are all those home purchasers in Spain and Ireland going who bought at the height of the bubble?
Your stupidity is boundless.
Tell me something I don't know? You just described the neoliberal two step ( lend the proles more money to buy houses, inflate prices and massively increase bank profits as the debt monkeys pay much bigger mortgages)
The debt is sustainable providing the underlying economy remains robust. As soon, as is inevitable, the economy enters a recessionary period high levels of household debt become a major drag on the economy as the deleveraging cycle kicks in. That is one of the key lessons of the post GFC world. And most of that debt is secured against the most illiquid asset of all-housing.
The rent monkeys end up paying even more money to the banks ya silly. They pay other peoples bank interest for them all their lives, and they are the really daft monkeys as they end up with nothing, not a penny to their names, from all the money thrown down the drain on renting.
Your latest error on Sweden was claiming it was more expensive that Australia.
Where your Swedish regulator popped into the conversation has no interest for me, I simply showed you an academic study of Swedish house prices showing them to be stable and not in a bubble. I knew you would not like it as bubbles are your favorite topic and now you are all angry and calling people names and it tickles my sense of humour to watch ya.
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.
By Johan Carlstrom & Niklas Magnusson - Sep 11, 2013 8:00 AM ET
Sweden is looking into the option of forcing households to start amortizing their mortgages in an effort to prevent debt loads rising from a record.
“We want to make clear that the next step, should we judge that we have to take it, rather is amortization than something else,” Martin Andersson, director-general at the Swedish Financial Supervisory Authority, told reporters yesterday after a parliament hearing in Stockholm. “If household debt accelerates, as we’ve seen before, well, then we must do something.”
Swedish apartment prices have more than doubled since 2000, sparking concern a housing bubble may be brewing after private debt hit a record last year. A report in March from the Financial Supervisory Authority showed that, at the current pace of amortization, it takes Swedish households 140 years on average to repay their home loans. Only 40 percent of borrowers with mortgages smaller than 75 percent of their property’s value actually pay down their debt, according to the report.
The government and central bank say the development has left households vulnerable to financial shocks. Sweden is already pursuing stricter regulatory standards for Nordea Bank AB (NDA), Svenska Handelsbanken AB (SHBA), Swedbank AB (SWEDA) and SEB AB than those set elsewhere in an effort to protect the economy from from a bank industry that’s four times its size.
Credit Growth
The central bank has sought to tame debt growth by keeping its main lending rate higher than the rate of inflation alone would warrant. The bank estimates private debt will swell to a record 177 percent of disposable incomes in 2015. Governor Stefan Ingves said yesterday the Riksbank should continue to monitor household debt when deciding monetary policy.
Since the global financial crisis started more than five years ago, Sweden’s FSA has taken multiple steps to try to curb financial industry risks, in part after credit growth exceeded levels the government said were safe.
In October 2010, the regulator capped mortgages at 85 percent of a property’s value and this year it raised risk weights on mortgage assets to 15 percent from as low as 5 percent. Ingves has argued they should be raised to 20 percent.
While the mortgage cap helped slow credit growth to 4.5 percent last year from above 10 percent between 2004 and 2008, the pace of borrowing has started to accelerate again. Household credit grew 4.8 percent in July versus 4.7 percent in June and May. It was 4.6 percent in April.
Toolbox Urgent
The Riksbank and the financial regulator have clashed openly over which body should have the main responsibility for limiting systemic risk in Sweden. The government’s proposal last month to hand macro-prudential oversight to the FSA marks a defeat for Ingves, who had argued that the central bank is best suited to handle such supervision.
“The Riksbank’s mandate remains unchanged,” Ingves, who is also chairman of the Basel Committee on Banking Supervision, said yesterday. “This means that the Riksbank still has responsibility for safeguarding financial stability. It is now fairly urgent to ensure a Swedish toolbox is in place to be able to manage various risks to financial stability.”
The government last month unveiled plans to raise capital requirements for Sweden’s biggest banks from levels that already exceed standards elsewhere. The measures are needed to protect Swedes left “vulnerable” to financial shocks because of the country’s large banking system, Financial Markets Minister Peter Norman said yesterday. So should it read:
Both Ingves and Andersson said yesterday Swedish banks will probably need to add a countercyclical buffer to existing requirements. Swedish bank core Tier 1 capital must be at least 12 percent of risk-weighted assets by 2015, a requirement the country’s four biggest lenders already exceed.
The countercyclical buffer should be “probably significantly higher than zero,” irrespective of the economic cycle, Ingves said.
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