Warning: new risks for new production

The government has gone ahead with a proposal to exempt new builds from tighter mortgage rules as a way of helping the construction industry retain profits and price levels as a way of tackling the housing shortage.

However today, the Swedish Bankers’ Association (Bankföreningen) is issuing a warning against exempting new houses from new, tighter mortgage rules. The association warns that the risks of loans for new productions are just as high as for existing housing, it could lead to a segmented housing market, and the purchase prices for new-builds will not meet the market value of the housing; for example a newly built apartment which cost SKr 5 million could fall by SKr 500,000 once on the market as a used property and when it is no longer exempt.