Borg predicts housing price crash

It is no longer a question of if, but when Swedish house prices are going to crash, warns former Finance Minister Anders Borg. “I do not see how it can be avoided,” he said at DI Bank conference on Tuesday, claiming that Sweden’s debt and its housing shortage have exceeded levels that mean a future price fall is inevitable. In turn that will hit growth when indebted households cut down on consumption.

Anders Borg wants rent levels for new builds and existing rental properties to be reformed to stimulate the pace of construction, the possibility to build at height in urban areas and curb the potential for municipalities and neighbours to put a stop to planned construction.

In response Finance Minister Magdalena Andersson agreed that the price of rents is an important factor for the development of house prices and that rising household debt constitutes a clear macroeconomic risk. However she does not believe the house price fall is around the corner.