Could Sweden's Housing Crisis Spread Across Europe?
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- Опубликовано: 7 сен 2024
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Sweden's housing bubble is bursting. That's bad news for Swedes but it could lead to a cascade of housing collapses across Europe. So in this video we'll unpack what all of this means for Europe and how the continent will react to a change in housing.
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I feared a housing crash due to people buying homes above asking prices with little equity. If prices drop, affordability and potential foreclosures may arise, worsened by future layoffs and rising living costs. I want to invest more than $300k in houses but I'm not sure on how to mitigate risk.
You are not alone we can no longer afford our mortgage, wife wants us to travel or relocate/I am proposing cashing in, walking away and renting while putting the rest in the stock market.
If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets. It's better to hire a skilled financial planner especially if you're not one yourself. I hired one after my retirement pension took a hit in April due to the crash.
Market behavior can be complex and unpredictable. Mind if I ask you to recommend this particular coach to whom you have used their services?
The decision on when to pick an Adviser is a very personal one. I take guidance from Sharon Ann Meny to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.
I just googled her now and I'm really impressed with her credentials. I reached out to her since I need all the assistance I can get.
An important thing to remember is the growth prior to the drop. Sweden had 16.8% increase im house prices in 2021, and 6.9% in 2020 for example.
Yes, and same thing around the world. Just correction, likewise on stock market. Hopefully world continues spinning and all comes back to ,,normal,,
Exactly. Negative equity is only an issue if you bought in the previous 12-18 months and you HAVE to move house (and you borrowed a 95% mortgage)
This is always forgotten! Thanks for pointing it out like a normal person. It’s always “oh a crash!” When there is a small ish dip but the growth of almost double over 5 years is totally okay? Pfff
Nice
This is the same with stocks, take tesla now everyone says it’s failing etc etc but everyone seems to forget how it rose meteorically from 2020 up til 2022. Things aren’t getting cheaper just stabilizing back to where they should be.
Hopefully. It's about time we get back to a market without a giant bubble.
But the neoliberals told me that regulations are bad lol.
I wonder if it effectively improves the affordability. Prices may drop, but that's because interest rates are rising, which may result in similar/same monthly payments. In that case, affordability doesn't really change.
@@jakewillsuffice6938 It becomes more affordable if you first save money and invest it with now higher interest rates.
@@jakewillsuffice6938 It's good for the rich that can buy the apartment with CASH and no bank loans. For everyone that needs a bank loan the affordability does not improve at all - sometimes it's even more expensive when you add in the extra monthly mortgage costs.
@@MegaBanne And they told me a credit based society is the best society even if it crashes every 10 years.
Another reason it's less likely to happen that way is that there is already too much demand waiting to absorb that regardless of how everyone is panicking and calling the crash. Nobody was making this prediction in 2008, at least not the general public, as I indicated below. In the other comment, it was mentioned that the ownership rate peaked in 2004. As of today, we are at the median level, having previously peaked in the second quarter of 2020. It decreased by 3% over 4 years, from 2008 to 2012, going from 68 to 65 in the second quarter of 2020.
The fact that the US stock market had been on its longest bull run ever makes the widespread worry and enthusiasm understandable given that we are not used to such unstable markets. As you pointed out, it wasn't tough for me to earn over $780k in the last 10 months, so there are chances if you know where to go. I hired a portfolio advisor since I was aware that I needed a solid and trusted plan to survive these trying times.
@@harod033
I tried looking into new strategies to profit in the current market because my portfolio has been in the dumps for the entire year, but everything I tried just seemed to miss the point. Please let us know who your financial advisor is by name.
@@alexanderjames3043 It's amusing that you brought it up since I completely understand. Look up [Ruth Loralann Brennan ]. she garnered a lot of coverage in 2020. I'm not sure whether I can mention this. My portfolio is also managed by her.
@@harod033 I immediately looked up Ruth's history. She possesses excellent self-control. She appears to have undergone a thorough investigation because of her strong credentials. She also offers her services to foreign investors from other nations than the US.
Well… the fact is that the guy who made this video is simply wrong. Prices are going up 🛗
Like any bubble, the sooner it burst, the lesser the pain. Governments should not let the bubble built up in the first place. Popping the bubble is always painful.
In Aus we recently discovered that out 9 straight years of conservative governments had spent tens of billions of taxpayer dollars on keeping home prices skyrocketing.
It’s like the worst version of this. Not only did they safeguard the bubble, but blew billions of dollars doing so. :’(
@Yevgeniy Friedland Besides monetary polices, government can implement rules to help increase supply of new houses, increase the bundle of buying a second property. Set rules to make it very hard for foreign investors to "invade" the local property market, and distort the supply and demand. When there is a will there is a way. Or you are happy to deal with bubble after bubble.
@@spektrumB Good point. If not for NIMBY rules, low interest rates are great for home building
The government doesn't care if the economy break's because they have had a long time to make themselves and their friends and relatives rich and when the economy break's they can use all that money to buy everything for cheap and then when the economy gets better again they will become even richer and the wheel of fortune just keeps going..
@@TiasVsEverything And that ladies and gentlemen is how you create a few generations of debt slaves once the bubble burst. Almost unbelievable that people who will lose everything and be paying for something that they don't have for the rest of their lives don't hunt down those responsible
I wouldn't call a crash in housing prices a "crisis". Isn't it more like a housing opportunity?
It is a problem for people already owning property, but great for younger people wanting a house
They're going to have to crash a lot more before that happens but yes this emans static assets get less aluable and hopefully work will become more valuable.
@@na9565 TBF most of them got unearned value... especially if they had already paid off loans.
@@DaDunge economists prediction for 2020s is for commodity prices to go up.... sounds like 1970s when lot of people had work and it paid relatively good while houses were relatively cheap..... aint most owners now those who bought one in 70s... some 80s,90s buyers got bad luck and had to sell it soon.
Lynn Alden gives pretty good predictions if can decipher heavy economics concepts indepth.
Should swedish housing crash like 50%? it is way higher than here in finland and also here it has only dropped like 5% and could drop 30% for making it more affordable for younger folks.
@@na9565 no, its bad wheb you wanna liquidate your house to invest in smth else. If you're an owner and do not plan to sell your house, its not a problem at all
Imagine housing finally becoming slightly more affordable and people calling it a "Crisis" . Smh
Its still not ”affordable” when rates have quadrupled for new buyers.
@@SteelmanArgument Yes, that's why I said "Slightly"
did you watch the whole video? It's still unaffordable because of high interest rates. The people who would benefit from this are those who can afford to drop large sums of money in one go, i.e. rich people.
@@valmiro4164 Can people in this comment section fucking READ????? I literally wrote "SLIGHTLY" .
only for realtors who gain percentage from sales price. if there is property tax, also owners will benefit from this as their payments as taxes go down.
I’m closing in on my retirement and I’d like to move to Sweden, but the prices on homes are stupidly ridiculous and Mortgage prices has been skyrocketing on a roll(currently over 7%) do I just invest my spare cash into stock and wait for a housing crash or should I go ahead to buy a home anyways.
Interest rate is currently at 4.75%(8th rate hike since March last year) Inflation at 7% and mortgage rates is at over 7.5% but yet minimum wage remains the same and my retirement portfolio has suffered tremendously these past years, so my question is how do senior citizens retire and live off such unstable economy. The long term game is obviously not for me at this point.
A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!
On the contrary, even if you’re not skilled, it is still possible to hire one. I am a project manager and my personal portfolio of approximately $750k took a big hit in April due to the crash. I quickly got in touch with a financial-planner that devised a defensive strategy to protect and profit from my portfolio this red season. I’ve made over $350k since then.
I've been thinking of going that route been holding on to a bunch of stocks that keeps tanking and I don't know if to keep holding or just dump them, do think your Inv-coach could guide me with portfolio-restructuring as i wouldn’t mind a recommendation.
Actually, I've shuffled through a few advisors in the past, and Margaret Johnson Arndt remains the most resourceful thus far. Her strategy proves profitable, and sustainable both in a bull & bear market. Most likely, her deets can be found on the net, so you can confirm yourself.
Wow, we are now calling more affordable housing a crisis. We don't live in an economy, we live in a country. We are not investors, we are people that might or might not invest. Let's keep the priorities straight.
So was the 2008 housing market crash a good thing? More affordable housing is good right?
The main difference is whether this crash spills into other parts of the economy or not. Crash in housing prices alone isnt bad...but if its followed by a crash in everything (*cough* 2008 *cough*), its bad
@@jakubblaha4904 As far as I understood, there are big differences between these housing crisis. The 2008 one was about market speculations and loans, where is this one is a burst of overly inflated housing prices in Europe. That's overly simplified, but it gives a perspective. Many cities in Europe are becoming unaffordable for its citizens and the current prices are unsustainable.
The ones who are hurt the most by this are the people who just barely managed to buy housing just before the interest hike, and are now unable to service their mortage.
@@nintendokings It wasn't a housing market crash it was a housing loan bubble popping. Sweden doesn't have the kind of crap that was going on in the US.
I sure hope that it keeps going. Young people need their housing
That won't happen because of this. For that you need to ban the speculative buyers in the markets and build more houses. At the moment this will just have the opposite effect. People can't move to a more expensive house cause they have to much debt so the lower tier of the market stays overpriced.
Given the interest rates are so high, it won't be any easier for young people to get a house without a massive pile of cash.
The issue is that by the time the house prices have reached their lowest point young people will have been hit soo hard by the other economic fallout that they’ll be no more capable of buying a house than they are now. Whereas rich people who weathered the storm will be in the perfect position to buy up all this underpriced housing for buy to rent and we’ll be in exactly the same position as we’re before. For young people to afford houses we need structural change to our housing market, not a crash for the wealthy to profit from
@@arturobianco848 exactly, it's like some people didn't watch the full video where they explained that
I'm a young person and bought my first house last year at rock bottom interest rates so my repayments are very affordable. If i attempted to buy now where interest rates are, i'd quickly realise the idea is a pipe dream
Oh nooo, something that's essential for people to live is getting cheaper 😪 What a crisis
nope it doesn't or at least not for most and not as much for those who need it the most. People won't move out of the cheaper houses cause they already have the debt . Or they go in defiency wich means they need to sell there house and can't buy one. Renting over a lifetime is more expensive then buying.
So the lower tiers of houses stay at a reletive high price, rent is getting more expensive because more people need to rent. Lower tier houses are not availible and thus expensive the only people who profit from it are the ones that don't need it.
So yes its a bit of a crissis.
@@andreasgregorfrank9057 We have the same effect here in The Netherlands. Because morgages got more expensive, less people are now able to actually buy houses. Therefore the pool of people who want (or are forced) to rent is growing, increasing the demand and therefore increasing the rent. Us normal folks can't win...
Make them free then. Allocate a house to each person at birth. That obviously they can never leave. That wouldn't have any negatives. History has shown such systems always work.
I remember crash in 2007. Yes, some properties got considerably cheaper but it was very difficult to get a bank loan (40% deposit was required).
@@frostbyte1987 Definitely! I am also a supporter of not allowing asset management firms to buy houses. Building is allowed, but after, say, 15 years, these new houses should be mandatory sold. That way, you actually encourage those firms to build houses.
Housing prices falling should never be called a crisis
Well when they trigger financial crashes like what happened in 2008 it kind of becomes a crisis.
@@zjeee it wasn't really the falling prices that caused the crash. It was the provision of mortgages (aka ninja - no income no job applicants) to many who could never afford them and then the packaging and repackaging of those associated debts as 'high rate financial' entities. These entities were somehow deemed to have an ever increasing worth despite the fact that the underlying asset, i.e. houses, were not increasing in value.
Yes, it's a correction.
not this time atleast
at china its a crisis because of debt used to sell more houses
this time...meh... just "turned out a bad time to invest in"
I would suspect that like with most things, the problem is not the change, but the rate of change. Big things happening in a very short time usually causes problems.
The big concern I have is that large asset management companies like BlackRock and Vanguard take advantage of this housing price crash. They don't care about the interest rate since they don't need to borrow money to buy properties. With lower prices, they get more property per dollar spent. Growing their portfolio of houses even faster and therefore increasing the power they have. It's a wealth cycle which only goes faster and faster in the direction of those asset management companies. It's a classic example of the rich get richer and the poor get poorer.
These companies aren't people. They are investing actual humans money. E.g. most people's pensions are in funds are invested with such companies.
You betcha
Just look up how much of houses they own. It's not that much..
Unfortunately, as the nature of capitalism's boom bust cycle
@@danielwebb8402 yeah and the pension funds get pennies on the dollar on their investment while blackrock and co take the lions share of the profits from our pension funds. If people invested that money privately it would be unheard that they get so little of the profit. The pension funds are getting robbed by these companies. We really need some legislation adressing that.
Because so many people overpaid for homes even while loan rates were low, I believe there will be a housing catastrophe because these people are in debt. If housing costs continue to drop and, for whatever reason, they can no longer afford the property and it goes into foreclosure, they have no equity since, even if they try to sell, they will not make any money. I believe that man individuals will experience this, especially given the impending mass layoffs and rapidly rising living expenses.
1 advise vou to invest in stocks to balance out your real estate, Even the worst recessions offer wonderful buying opportunities in the markets if you're cautious. Volatility can also result in excellent short-term buy and sell opportunities. This is not financial advice, but buy now because cash is definitely not king right now!
@@sattler96 You are right! I've diversified my 450K portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above $830k in net profit across high dividend yield stocks, ETF and bonds.
Where may one locate an experienced FA? I like the notion of employing their services, but it's terrible that recent stock market tragedies have started to happen more frequently.
I'd recommend Colleen Rose Mccaffery. She is a genius when it comes to diversifying her holdings. You can verify her identity for yourself by looking her up online. She is well knowledgeable about the financial market
Thanks for sharing, needed this myself. I just looked her page up online and I would say she really does have an impressive background on investing
just 17% down is still enormously bad. It need to go down more. Houses and appartments are stupid expensive.
Indeed. Especially since prices went up around 20% during the pandemic… now we’re getting back to pre-pandemic levels which were still high, but with minimal interest. We need prices to drop by a third in order that houses become attainable with serviceable interest rates for average income-earners.
My primary concern is how to grow my reserve of $300k which has been sitting duck since forever with zero to no gains, sure I know the risks of short term gains are much greater but if well managed one'd make a killing, am I wrong?
These strategies are quite rigorous for the regular-Aden. As a matter of fact, they are mostly successfully carried out by pros who have had a great deal of skillset/knowledge to pull such trades off.
I’ve been on both end of the spectrum, I was lnvesting on my own for about 3years, did my own study and analysis before actually buying, things became rather difficult after the pandemic which was right about when I reached out to a portfoIio-advisor for guidance, It’s been over 2 years and I’ve scaled up a stagnant reserve of $280K to $700k in just about 24months.
@@anniezeng4587
I've a lump sum doing absolutely nothing at all in my bank account, i wanna gets something started with it. You seem to be doing excellent for yourself, how do you achieve this?
@@selenajack2036 Eleanor Annette Eckhaus is my portfolio-coach, I found her on Bloomberg where she was featured and at once, looked up her name on the web.Thankfully, I came across her site and reached out to her.
Found her, I wrote her an email and scheduled a call, hopefully she responds, I plan to start 2023 on a woodnote financially.
I reached my goal of $200k yearly trade earnings. Setting realistic goals is an essential part of trading
Speaking of in-vesting, I know I am blessed if not I wouldn't have met someone who is as spectacular as Mrs Rosiana Ruth Abety
My first capital invested with Rosiana Ruth Abety gave me good ROl of over $19000 and since then she has never failed to deliver
wow!! you know her too?
I even thought am the only one she has helped walked through the fears and falls of forex trading
@George boe Oh yeah She is always active on whats-app APK🇺🇸
Yes! Burst! Do it! I have no sympathy for people spending beyond their means and real estate speculators seeing their "investment" crumble before them. Home's are built to be lived in, not to just exist so that you can boost your nest egg. So despite the greater socioeconomical this undoubtedly have, I'm all for it. I live in Sweden and I sometimes visit real estate sites, not cause I'm looking to buy right now or anything, I just find satisfaction in seeing all the prices falling. And who knows, if things continue like this, maybe I will be able to buy a home some day. That would be a mad turn of events.
While agree with your issues with house speculation this will not hit those sectors the worst. Families, especially younger ones is the one that will be hurt the most.
That is not an argument for a status quo, but for a more balanced solution where the issue is handled with a delicate hand rather then a bomb.
The irony if you have to take a mortgage to buy your property
I would fully agree, were it not for the fact that last time this happened, the people taking the brunt of the hit were the actual people whose loans to pay off their already overpriced houses suddenly shot up.
That being said, yes, by any and all means, fuck real estate speculators. Betting money on shit people need to live should never have been legal in the first place, so let it blow up in their faces.
@@jespervesterberg6085 I don't understand why there are so many comments like OP's when the video addressed that a crash won't help
Preying on peoples downfall while acting self righteous, nice
I don't think a housing crash is by default, a housing crisis. More often that not, its the other way around.
We have had a housing crisis for many years in Sweden now however, long before the crash. High immigration combined with not enough building leaves it impossible to find an apartment, at least if you want to live in any of the bigger cities. Especially Stockholm, thats where its real messed up.
@@Nick_Goblin Yup, they pretty much stopped new construction of affordable housing in Stockholm after "miljonprogrammet". At least at any significant scale.
@@Nick_Goblin Immigration is not the issue. In fact Swedens population has grown a lot more before than it is right now.
@@Nick_Goblin Only in urban areas though, in rural areas, we have entire villages filled with empty houses in excellent condition. If you can work remotely, or are okay with commuting, you have a lot to choose from.
@@Nick_Goblin Blaming migrants for housing prices is like blaming your vegetables for having a too high calorie intake.
To my understanding this just proves how much we need an edge as investors because playing the market like everyone else just isn’t good enough. I've been quite unsure about investing in this current market and at the same time I feel it's the best time to get started on the market, what are your thoughts?
Such market uncertainties are the reason I don’t base my market judgements and decisions on rumors and here-says, got the best of me 2020 and had me holding worthless position in the market, I had to revamp my entire portfolio through the aid of an advisor, before I started seeing any significant results happens in my portfolio, been using the same advisor and I’ve scaled up 750k within 2 years, whether a bullish or down market, both makes for good profit, it all depends on where you’re looking.
@@iclaldizdar7007 My advisor STACEY LEE DECKER is highly qualified and experienced in the financial market. She has extensive knowledge of portfolio diversity and is considered an expert in the field. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market
It's incredible that RUclips censors comments for saying specific words but they refuse to block obvious scams like this.
Guys, how about we check facts first? In Sweden housing market is rising…
As a young swede I am unbelievably happy about this. Might actually be able to afford a home in my lifetime because of this. If that's at the cost of some old guy's house being worth half as much, then so be it. They already have their own homes, and my generation are going to want our own as well
You are from Sweden. Massive huge lands. I'm from Netherlands we have tiny land, more than 50% is dedicated to agriculture. And we live with 18 million people in this cramped up space. You have FAST land, so enough to build houses on so its actually really easy for Sweden to make housing affordable. Here the land is scares. Sweden 10.4 million people, huge acres of land. Land must be cheap and u can build houses on it. Easy peasy.
@@HermanWillems You are correct, we have massive amounts of unused land. The most northern part of our country, "Norrland", literally just "Northern Land", had a problem with perfectly good homes being torn down because no one wanted to pay for the maintenance.
And that is because no one wants to move dozens of kilometres away from their friends and family, to leave in a cold, dark and very lonely place. There is much to do either in the north, since there naturally are more jobs where there are more people.
So yes, many people would be able to afford a home in the scarcely populated areas,but they would be living there only for the sake of having somewhere to live
@@roban2799 What about people that work remotely? Won't they move up north for cheaper housing? I am asking because it's hard for me to believe that such houses wouldn't be in a demand, especially because rich people would buy these so they can spend their free time there.
I'm a student living in a student apartment in Stockholm. I get around 11000SEK in student loans every month and I need to pay 7000 of that to rent alone. If I fail more than two courses during the whole semester I lose my loans (I also get no loans during the summer and only half loan in may), meaning I need to work on top of my full-time studies and even then I'm always like a month away from having to give up the apartment.
I live in a constant state of anxiety because of this
Have you considered living in shared accomadation?
@@danunpronounceable8559 it’s not really a thing in Sweden. Most students will have their own flat, some live in dorms, others live with their partner. Very few share a flat or house with friends or random strangers as is common in Europe. Swedes are incredibly spoilt when it comes to housing compared to Brits and it’s always interesting hearing Swedes complain not knowing what an actual shitshow it is in places like Britain (I’ve a foot in each country). Stockholm students complain about their fully outfitted apartments costing £600-£700 a month, money for which they’d get a small room in a mouldy house they’d have to share with four others in London. Of course economic anxiety is real, but suffering is certainly relative.
I'm a student living in a student corridor in Lund, Sweden, 3800SEK a month, no rent during the 3 summer months which i've previously rented out during the same period, earning 9000SEK instead. The Student life can be quite affordable if you just adjust. Not that I have, still spend 2K a month on kebabs and some other Ks on alcohol
@@k.j.hulander2204 To be fair, London is a hellscape housingwise.
@@Theorimlig indeed. But in the mind of Swedes, Stockholm is peak housing hell and they’ve no idea how privileged they are compared to many other places-that’s the point I wanted to make.
the prices have been artificially high for a long time, boomer majority voters have always gone for parties that can increase house prices and not parties which wants more affordable housing. so this is hopefully something that will just get "worse".
I mean even the fact we talk about cheaper houses as something bad, shows how much power the boomers have had. I doubt young people who've been saving up for years, sometimes decades, without being able to buy a house thinks this "crisis" is that bad.
I'd say GenX are worse than the boomers.
@@DaDunge it's about the numbers. there's more boomers than genX, so therefore they have more voting power. it's not about being worse, it's about self-interest. each generation have self-interest, but when one generation is larger then it will have an impact on political decisions.
@@Nabium But the boomers are so old at this point. The youngest boomers are 60. GenX is going to be s huge problem going forward because they are so damn conservative (the most conservative generaiton at their age in recorded history).
@@DaDunge but there's less of them. that's the whole point.
and that's a UK stat, it doesn't automatically translate to every other nation.
I'm not conservative, I'm green, but still I don't think them being conservative is the big problem here. it's about one generation having huge numbers because of a babyboom after the war. all their lives they've gotten what they wanted. help for students and cheaper higher education when they were in their 20s, cheap housing and building up infrastructure and securing jobs when they got a bit older, and so on. they have outnumbered every other generation all their lives, and as a result politics and media has delivered everything they have wanted on a silver plate.
they even influenced the discourse to the point where we talk about lowering the ridiculously high housing prices as a "crisis". they even control the language and how we talk about politics, which in term influence the entire debate.
I bought an apartment 4 years ago in Vilnius. Purchase price was 136k eur brand new. At that point it was a grey box so we had to put a lot of work on walls, floor, ceiling and furniture. All in all it cost like 170k or so. Bank loan was 85% of original price so ~115k eur and by now the value of our apartment skyrocketed to ~300k eur. Since the euribor rate hit ~2.5% the mortgage payment also went from ~470eur to ~615eur per month. We don't mind paying a bit more, I just feel bad for my friends that were a bit late and despite earning more than we did when we bought our apartment they can't buy anything as good right now and they will certainly eventually have to take a bigger loan etc. In current context we were kinda lucky and we wish our friends were as well.
You didn't buy the apartment, the bank did. You don't own the house, the bank does. You bought a home and not a house. If you think you are the owner of the house, stop paying your mortgage and you will soon find out who owns the house.
Why would you buy an apartment, here apartments are more expensive then regular family houses. And only OLD people buy those. It's totally weird if your young and buy an apartment. At least it is here. When i got a job, i bought a 5 bedroom house. It is cheaper than renting or buying an apartment. That house was 145.000 euro. (Netherlands) in and around 2015.
@@HermanWillems Maybe because new houses were not available in given area?
Situation in former eastern block regarding housing is very different to situation in western Europe. In Czechia such houses in good condition and in desirable locations became basically unobtainable for young people around 2017. Today such house in bearable conditions and 10 km from edge of the city costs 250 k € (but it will most likely cost you another 100 k € for necessary repairs and changes), those in good locations from 375 k € up. At the same time average wage in Czechia is about half that in Netherlands. The prices were roughly half of current one in 2015 - 2017, but they were twice as expensive than your house if we would factor in wages. Up to some 2018 you would need 10 % of total sum, since that you would need 20 % of total sum of mortgage. At that point it became almost impossible* for many young people, me included, to buy house or flat.
*With today prices it would cost me basically whole net salary just to pay interests with current interest rate. I am close to limits of what I can earn here a web developer. (Maybe if I would became self employed and ten work for some company it would give little bit more but still too little. It almost seems like the sum they write on adverts is sum they want to pay with all the due fees they have to pay to state or to somebody who would pretend to be self employed yet work for them just as employee but without any benefits. And such arrangement is not even legal under our laws, yet it is quite hard to punish the company for that. Many people accept such arrangements as it seems like it is beneficial form them yet in the long run it perhaps is not. They do not have paid vacations, sick leave, are easier to get rid off and most likely, as result of attempt to pay as little as possible to state, none or very low pension) And even if I would have wife, then the other wage would end paying for bills and food. So ti would be either house or family.
As far as I have heard it is not much better in other countries of former eastern block.
Just last note. there is page that compares wage to property price. In Amsterdam it is 10.3 average wages to buy property (according to that page) In Prague it is 19.3 average wages, almost double. Brno 16.4, Plzeň 12.2, Olomouc 11.5, Ostrava 7.8. Compare it to: Utrecht: 8.0, Groningen 6.9, Den Haag 5.9, Eindhoven 5.7, Rotterdam 5.6. While in Netherlands those are cities widely known at least in Europe, those cities in Czechia are not important for the world at all.
Nice and informative video. let's always focus on how to earn, because with the current recession and financial crieses world wide, i think getting just a job only isn't the best soluution to attaining financial freedom that's the more reason one should save and invest wisely .
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One strategy for protecting against a recession is to buy equities. Investors, especially during a recession, need to know where and how to put money in order to make money while avoiding inflation.
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I'm sorry to say, but falling house prices is NOT a housing crisis - it's the other way around, the housing prices are so high that millenials and born later, who are earning 2x average wage still can't even afford to buy a small apartment - while older people are retiring early, living in huge villas that that bought on a avaerage income - for some reason now are worth what one can only earn of the course of 3 life times.
It’s a crisis, when people who have all the money, lose a bit of it.
Housing prices falling and interest rates increasing plus inflation means that people sitting on a lot of cash buys them and not the poor and young that would actually really need housing...
@@CheekyHaggis so we wait more boomers to die so more houses come for sale? also moderate longterm inflation could help this in longrun. EU area where interest was 0 for a decade had made housing prices too high, as those already rich got lot of cheap loan, while others had to pay upwards rents. with some inflation "apartment trading"/investing is not as desirable. regular people getting 5 or 10 investment apartments was crazy before 2022.
@@CheekyHaggis Sure, this current setback in the housing market does not fix the problem for the young workforce - they still can't buy anything, and are forced to live in rental, at extreme high prices. It is not uncommon that young people pay half their income in rent - money they'll never see again, and in most cases money that ends up in the pockets of people in the older generation who really don't need to become more wealthy.
Oh, so good that banks are safe. I was worried about them. People's mortgages go under water, but by all means let's focus on preventing banks loose 1%.
House prices wouldn't be so high if not for Real Estate Sellers. They pump up the price so high and take a huge cut just showing up in a suit, taking photos and writing beautiful things on the advertisement.
"a cheap home is of no use to anyone if you can't get the money in the first place to actually buy it" lol so the solution is make them expensive again.
I am glad, let these greedy house owners and real estate agents suffer.
Owning a home is greedy??
@@chilldude30 i mean... yeah? it depends but if you're gonna buy a house and wont live in it, then yeah i think its safe to say you're greedy.
@@chilldude30 Sure, if your mentality allows you to interpenetrate my message.
@@upcom1ng116 You will be happy to know then that the money they lost is going straight into the banks pockets instead with higher interest rates on house loans. Because banks are not greedy at all, right?
Housing prices falling and interest rates increasing plus inflation means that people sitting on a lot of cash buys them and not the poor and young that would actually really need housing...
Yes, house prices and rent have become unaffordable to the minimum wage worker.
Won't be long until the whole market collapses again as the housing companies are too focused on profit to care.
I love how "people are not as unlikelly to be able to buy a home as they were two years ago" is framed as a crisis :P
When my partes bought their house in the late 80's, they payed (adjusted for inflation) about 1.2 million SEK. That house is now values at well over 3 million, even after this "crisis".
Buying a home is still a luxury that many can't afford, so another 20-30% drop in prices would just bring us back to a point where more people can afford a place. I'm all for that.
In theory, sure. But cost of living is skyrocketing, disproportionately to increases in wages. Couple that with banks likely becoming more restrictive about approving loans without guaranteed coverage from the recipient, or worse yet, raising the down payment from the 15% we got after the last housing bubble, we could instead face a situation where the younger people who were previously unable to enter the housing market still being locked out do to not being able to set aside the funds needed to purchase even at the lower prices.
Unless you don't need a mortgage, not clear how paying say 20-25% less for a house and say 40-50% more in monthly mortgage payments is good for first time buyers. In 2008, when rates fell, it actually was (assuming you could get a mortgage). Now it is only good for cash buyers.
Funny how 1.2mil to 3mil seems like a lot to you but it's nothing compared to Romania.
My apartment was 24,000euros 3 years ago, it's 120,000euros now.
My parents bought a house for 30,000euro in 2001 and now it's valued at 650,000euro....yes that is 21x more.
Fuck houses!Who gives a shit about them?Just burn them to the ground and make some nice emty space!
German living in Sweden here.
In Sweden people are more likely to buy apartments than rent them compared to other countries. And in cities like Stockholm they sometimes only keep an apartment for ~3 years. And in the past prices have continued to rise because everyone wanted to sell their apartments for more than they bought them even though they had not invested anything into renovations. But this obviously can't go on forever. In more rent based countries and those where you buy houses and apartments long term this is less of a problem. But the housing bubble in Sweden really needs to burst. Otherwise soon no one will be able to afford it anymore.
Side note: renting from big housing companies is heavily regulated with waiting queues of 15 years. That makes it unattainable for anyone migrating to Sweden and only forces more people to buy with the expectation to not lose money on that.
I don't now about Stockholm but the waiting queues in my town is now that bad(1-2h west of Stockholm) in some areas yes bot most its in months
@@MadSwede87 yeah, I live in Stockholm. The rest of the country has definitely shorter queues and more reasonable housing prices as well.
Actually the Swedish home ownership % is lower than the EU average. The EU average is 70% and Sweden is at 64%.
@@MadSwede87 What he said about Stockholm is true, the waiting queues can easily go well beyond 15 years.
I'm glad I don't live in Stockholm xD
The "wealth" effect may be offset by what I call the "disposible income effect". Home renters have more money on hand because, in theory, lower housing prices should cause rents to either drop or at least stagnate, resulting in more disposable income for home renters, which they can spend on luxury items. Those two effects should be cancelling each other out.
Also, here in Germany, we have no problem with unemployment but rather a worker shortage in all areas thanks to boomers reitiring, so I don't worry about my job.
It’s wild to me that I’m sitting here watch 2/3 of my income go overseas to my Chinese landlords but just in case a rough patch for them might impact the Australian economy, we must do everything in our power to keep their wealth and profits high.
actually rents have increased massively as landlords default on their mortgages and are forced to sell, restricting the supply of houses for rent. It's bullshit that buy to let was a legitimate bsuiness for so long but hey ho thats the low interest economy for you. The rich get richer and the middle class become poor. Give me 20% interest rates any day.
It also depends on how home owners spend their wealth. If home owners keep buying new properties and keep them empty, they are increasing home prices without helping the economy.
Higher interest rates increases costs for landlords. In Sweden they wanted to increase the rents with 10% this year. There's still a lot of negotiation to be done and it will probably end up closer to 5% but it's still much higher than in the past with 1-2%.
Wait why would rent drop? Or even stagnate? Rent has had it's highest general increase in sweden this end of the year than in like 15 years, normally 2-3% rent increase in general but this year it's around 10-15% rent increase. Where did you get the idea that rent would stagnate from?
Houses can be unaffordable with either low interest and high price, and with high interest lower price. I think the problem is that a lot of people are using the home as investment, leading to the high prices and empty apartments. Put absolutely devastating tax to 2-3rd and so on homes. This will cool the enthusiasm to buy just to invest.
How many people do you think own second homes? 10%?
And devastating tax results in.... less properties built and higher rents (as less supply). This has already been tried in the UK and has resulted in higher rents as houses leave the rental market.
@@danielwebb8402 Lots of rich people own extra apartments to rent out to tenants. And if so few own those, as you say, such a tax wouldn't be a problem.
Well if the prices keep dropping the rates will also eventually drop and then will be a good time to buy.
@@danielwebb8402 You vastly udnerestimate that. I would say that at least 60% of those who own one home own two.
@Fredrik Dunge
If that is true then yes I do vastly under estimate it.
Sweden is 2/3rds own their own home. So if 50% of those that own do own a second home that means 0% are owned by state / councils / housing associations / businesses.
0%
Please spread to the US please spread to the US
Your demographics are not as terrible as Europes. That's an angle I'm missing in this video. The babyboomers are retireing and then dying off, which frees up the biggest and most valuable real estate all over the world. This redistribution of land is hitting now and will keep going for 10-20 years.
Europes demographics are very, very vulnerable to this effect. The USA less so.
Do I expect this real estate crysis to hit the USA? Yes. But it will be way less bad then Europe in the LONG run. Currently, the US consumer is in much more dept than his European compatriots, which will cause a short to mid term dept crunch.
TLDR: Yes. The USA will be affected, but much shorter than Europe.
@@andreasbucher7717 "Your demographics are not as bad" Thanks for reminding me of the 5 million Salvadoran and Nicaraguas. Yeah, Sweden is weird because thanks to Muslimo, sorry Malmo, they're mysteriously Nordic's rape capital. Less people is always a good thing. Watch Japan and Singapore (who let in no worthless refugees) thrive
Prices here in Sweden are still ridiculous. As soon as you enter a little better area, more central area or some kind of ski or cost area the prices can easy dubble or triple.
My ultimate dream is to buy a big plot of unattractive land and turn it into attractive land, building houses along the way and therefore increase the value of the land.
Let me laugh.
How much is it per square meter? Because in 90% of cases (besides some fringe cases like Canada or California), when westerners talk about "crazy prices" it turns out they have like x2/m^2 with x6-8 salaries
@@Poctyk Housing prices in Sweden are not really that bad - we just like to complain about anything. I will say if we are talking about the capital Stockholm then they are much higher than the rest of the country. Stockholm is 7823.50 USD/M2 the national average is 4379.25 USD/M2. I do have to mention that in Sweden you are expected to buy the apartment by yourself though. Many of my Asian friends laugh at the prices not being too bad until I mention that you are expected to buy the home by yourself and asking your parents or family members for money is frowned upon. I think that's why a lot of westerners complain about the prices even though they are not that bad compared to some places in say Asia. It's because in western countries you buy the apartment by your own money. In for example Asia your parents and grandparents will all chip in and it's not uncommon to have more than 5 people come together and buy a home for their children or grandchildren.
@@Poctyk I live in Gothenburg and apartments can easy start costing 7-8000 Euro per square meter. Which is way to expensive for most people.
@@warlord95Sweden honestly it is quite weird to say that and I can elaborate why. The area in Gothenburg where the price per sqm reaches 7-8k is considered the expensive area, it's not the average price, right? There are people who earn very different wages and it is obvious if you are a low wage worker you cannot afford living in such area, how is it not normal? That's how economy works, if you want it to work differently - then you need to be in a commnuist country where prices and wages are totally regulated by the government. I do say that as a person living in Stockholm for the last 7 years. I lived in a different areas. When my income was low I somehow couldn't imagine living in Östermalm and lived in a cheaper area and I considered it be OK?
As a Swedish Millenial just out of uni, I could not be more elated that this is happening right now. The boomers have priced us out of the housing market for the better part of a generation while privatising the healthcare system, privatising schools, and ending the subsidies on affordable council home construction by voting liberal . It truly feels like justice is being served when they now get to depend on the welfare system they voted to hollow out after seeing their speculative savings in real estate evaporate
@@well-blazeredman6187 Check the demographic figure Sweden is Facing. We need Immigration to be able to sustain our standards.
@@well-blazeredman6187 Personally i can't choose any side. But those refugees need to get somewhere. We are taking the refugees because of moral values, not the consequences
Not voting liberal. Voting capital M Moderate. The Liberal party while not the admirable soical liberals they used to be are still far more small m moderate than the Moderates.
@@well-blazeredman6187 They've got nothing to do with the issue. The generational wealth gap is the real issue. The boomers and perhaps evne more GenX are shutting down the very programmes that allowed them to accumulate the wealth they possessed. And the Immigrants issue is just a way for them to justify doing it. It's classic missdireciton they flash immigrants with their left hand while the right hand plunders the nation. The rich are emptying the naitons coffers and building Swedish speakign towns for only wealthy people in Spain.
@@well-blazeredman6187 I'm not them, but it is a statistical fact that Swedens economy grows considerably with immigration. In a paper by Svenska Riksbanken unemployment goes below 30% just within 5 years, and overall % participation in the job market is 80% after 5 years, reminder that this also includes children and retirees who do not participate in the workforce. There is definitively considerable growing pains with integration and cultural clashes. But due to Sweden's low birth rate(expected to be as low as 40% in 2045) immigrants are crucial to a surviving economy.
Maybe this will snap people out of thinking of houses less as an investment, and more as a commodity.
Because thats what housing is, its a commodity.
I'd say having a roof above your head is a necessity rather than commodity...
@@kaworunagisa4009 so is food, it's still considered a commodity.
@@vod96 Well, every necessity is technically a commodity, but not every commodity is a necessity.
@@kaworunagisa4009 you are missing my point. Housing is seen as an asset - rather than a commodity. With that being the case, people tend to vote in and out people (usually on the local level) that keep their asset prices going up (zoning, NIMBYs, shadow and view requirements etc.)
That introduces a distortion to the housing market, that first of all bleeds into the rental market and second of all causes bubbles every now and then that ripples across the economy. If housing was seen as service (aka a commodity), regular market forces would apply, just like on food.
@@vod96 I guess we haven't understood each other then. What I meant was that housing is even more important than a regular commodity people can live without (like, for example, fast food or personal transportation), so it deserves special consideration and even stricter laws.
Wealth effect: when people spend money they think they have until they find out that they don't
In Estonia, all appartment and house prices are like 20% or more down
It's all relative. I always compare prices to 2019 levels because covid somehow had a huge effect on housing prices.
How is this a crisis this is perfect
Because old people with a house decide what is a crisis and what is not.
This is good news for everyone without a house.
@@buddy1155 how?
@@Simon-sw4ov Oeps, changed it. Good news for people without a house not people with a house.
Not realy, it's just a minor dip. Prices would have to drop a lot more and get entrenched on lwoer levels for this to be a good thing.
Housing prices falling and interest rates increasing plus inflation means that people sitting on a lot of cash buys them and not the poor and young that would actually really need housing...
As a Swede I am glad housing prices go down. The market has been booming for a very long time.
Any young person today needs rich parenst to by... even the smallest flat.
If you can not afford that renting second hand is really expensive as to buy has become so expensive (the alternative cost is really high so higher rents can be demanded).
Hopefully prices fall back enough without any panic/crash. I see no real reason for a crash, if you sell on teh cheap you will not get any other cheap housing so... only the desperate will sell.
More likely this is just a dip and prices will go back up soon.
@@DaDunge Prices are still going up in Sweden depending where you lice in Sweden.
@@roxpace Yes because we're selling power to Germany to make up for their troubles. But many of the power providers selling energy are majority stake owned by the government so that money will get reinvested.
Oh God, I HOPE SO!
This bubble MUST burst!
The problem is: Even if the houses would get just 10% lower (in Hungary, they are NOT, not a single digit %), the bank loan to buy a used apartment has now more than 10% interest rate. For example, for an apartment costing 88.000 EUR, I would need (after 10 years of saing) 63.000 EUR loan, and paying it back in 20 years in the end, I'm paying back 131.000 EUR because of the interest rates. So even if the house prices would fall a tremendous 20%, I'm still in no place to be able to buy my own property. So oI have no clue why, because I'm not an expert, but this "housing crisis" is just smoke'n mirrors for me because it does not make houses cheaper in the form if pruchaseability.
You could use the symbol € instead of using the abreviation EUR .
Hold the AltGr key (Right of the spacebar) then press E
@@plumebrise4801 that depends on your keyboard layout actually
No, ofc it does.
The house IS cheaper. Your salary can buy you more space with the same amount of money. The mortgage you took before was an illusion that artificially put people with savings and people without saving on an equal footing. If you cannot afford now, invest in sth else than property, get enough savings to buy a property and voila. You have a home.
Before you were paying an artificial premium to people that happened to have owned a house before prices sky-rocketed. If the prices crash and interest rates remain high you will be paying a premium to your national bank IF YOU TAKE A MORTGAGE via interest rates.
If you don't then you will actually pay a more realistic price for a house.
So yeah, cheaper house prices and higher interest rates are better.
In France, the mortage rate is fixed for the whole duration of the loans. For instance I have a fix rate for the next 25 years.
You’re very lucky. This is the most buyer-friendly way of doing it.
@@k.j.hulander2204 well thanks. But it is also harder to get a loan in the first place. So I have heard, I have not try to borrow money abroad yet lol.
House prices in the uk have been rising crazy for the past 10 years. Hoping for prices to fall back down to 2010 so I can finally afford a home
They won't fall that much, not even remotely, sorry to disappoint you
This video does not mention few important things:
1. I live in the Stockholm area and I have bought a house in 2021 and back then a 3-months mortgage would have interest rate of around 1.1%. Since the start of 2022 the interest rates have started climbing, but parallel to this banks are denying mortgage applications en masse (or better said - banks have a much more conservative lending criteria than before). This makes the pool of potential buyers much smaller.
2. In the peak of the housing frenzy many people were buying houses of poor quality (far from the city, no public transport, need of renovation, etc) for the same money as a house that has a good location and are in a better condition, just because such houses were impossible to find. In Sweden people don’t look at “average price per square meter” and just bid on whatever their heart or pocket wants.
3. Nowadays the real estate listings are quite empty - no one wants to sell their house any more unless they have to. So people that want to cash out their house and move to an apartment are not willing to agree on a smaller amount and have decided to wait out the crisis.
4. Because of (2) and (3) there are less desirable houses on the market and the undesirable houses are sold cheap (at a correct/realistic valuation).
Houses in desirable locations are still sold at the same prices as at the peak, but they are so much fewer than before that they don’t move the needle.
I’ve fixed mortgage and I am happy with my house, so don’t feel sorry about me 😂, but I know neighbors that bought their houses well into 2022 and they have it really bad - high mortgage rates combined with high electricity prices :(
😂 sorry to rain on your parade, but you do very care about price of your house - if it goes below what you've bought it for, you're underwater. And if you lose your job, you quite literally owe more than your house is worth. But congrats on low interest rate, just hope that bubble doesn't burst below 2021
@@greenl7661 the good thing about houses is that they provide you with utility (shelter, warmth and place to be), so even if the price goes down you still have the utility with you. Prices always go up in the long run, even if there is a bust now, there will be another boom in 5 years or so and for now I don’t see myself worrying that I would have to sell at a loss. Houses are not crypto shitcoins, they are not going anywhere and you can actually use them for their intended purposes (thank god)!
Love to see that, Houses aren’t supposed to be investments but commodities
nah both are true. u should also be able to invest in buying a house, i bougt a shitty house and have living as normal but turn my hobby into renovating and building, and if i sell today i would make about 300% profit from it, but im not done yet .
Considering the insane price-increases during the last 2 decades a crash of sorts is bound to happen. And its a good thing.
BURST IT!!!
BURST IT!!!
BURST IT!!!
BURST IT!!!!
The same is happening in Australia. It's really not a problem. Prices are still much higher than they were in 2019.
Is that market fully comparable though?
@@Simon-sw4ov property prices in Sweden are still 10% higher than they were before COVID, so I believe it is comparable. You'll never find an exact match and Sweden is obviously closer to Ukraine, but it's still a valid comparision, in my opinion.
I've said for a few years that governments need to try to reduce house prices before they crash to ensure they lower in a controlled fashion. It may now be too late.
The government can always build affordable housing. Besides budget, there is nothing stopping them. They can just go and build affordable housing, and the housing crisis would be solved. Private companies just want money, so they build expensive suburban housing that requires everyone to own cars and that are extremely inefficient in space (they also look fugly). The government stepping in to build affordable housing is a really good solution, since they only care about results and not money.
Even the cheapest of housing would be good. I'd rather live in a commie block than on a park bench. But it doesn't have to be commie blocks. Look at what Austria does with their public housing. They could end homelessness, but they don't.
It also wouldn't ruin the market or whatever, because it'd just be affordable, not extravagant or whatever.
@@lanata64 Besides budget, except budet is a very real cocnern. They need to pay for it, and unfortunatly they need to pay for it without raising taxes too high. And beleive me the current government sure as hell won't raise taxes at all.
@@DaDunge you can always just tax the rich people at the top that just sit on their wealth and play gods. Though there's plenty other ways to raise money. You can also just adjust the budget, that's how programs are normally paid for.
@lanata in the US at least, most state and local governments are not allowed to run a budget deficit or wantonly increase taxes. They also have to pay prevailing wages and in some cases meet sustainability goals which make developing the affordable housing very expensive.
@@lanata64 affordable and social housing would help, but the long term solution is policy decisions that don't prioritise housing as investment, instead emphasising housing as housing.
This has the indirect benefit of making investment in business comparably more attractive, which is good for the economy in all the ways investment in land is not.
It is needed. I'm 21 and I can't see myself ever buying a house at the current prices!! A roof over your head is a human right, why is it unaffordable?
Housing prices in Sweden are not too bad compared to the rest of the world. And even then it's only expensive in Stockholm or perhaps Gothenburg, you look outside those cities and you will realize it's not really that expensive.
@zjeee
I don't live in Sweden but it's needed in general. Rent is way up, not only house prices and energy prices are reaching a similar level to rent prices.
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So basicly whats happening now is just a market correction of the artificial kept low interest rates of the last decade. Yes it hurts but its not the end of the world. After rhe correction things will be moving again.
This will be a hurtful for Sweden for a while but this thing have been waiting to burst for some 5-10 years. Rather impressive that it managed to take this long.
F-ing finally, it's happening!
No condolences to anyone negatively affected by this.
I'm not. I don't care about the prices because I live in my property and intend to live here for a longer period of time.
Meanwhile in my country, interest rates are up but housing costs keep rising, so you're both deeper in debt and your future house gets 20% further every year.
As a Swede.... the housing prices are fueled by primarily 3 aspects:
1. The national bank (remember that Sweden has its own currency and interest rates) has through their financial policies (for example negative interest rates) fueled prices by making it cheap to borrow and speculate. They along with the banks have for years flooded us with cash, mostly benefiting for example home owners and those who own shares (pensioners. QE has pumped share-prices). It's a policy benefiting the old, while it has caused a disbelief in society among the young since society isn't there for us.
2. The parliament (politicians) further favors those who own, for example by providing generous (and for the national budget unsustainable, dangerous and ever increasing) interest-subsidies (ränteavdrag för bolån), by selling out publicly-owned apartments (see for examples the Alliance 2006 - 2014 in Stockholm) at such low prices so you'd be an idiot not to buy, and by making for example the promised electricity-subsidy only available for those who own their houses/apartments.
3. It sucks to rent, hence the norm is to buy once you can. It is difficult to find an rentable apartment (especially at a reasonable rate, and/or quickly), expensive (in two senses, either that you don't have the queue-points so you'll have to rent on the free market, and secondly by the fact that you're losing out the ridiculous price increases that a private dwelling would have), and tedious (non-queue renters move a lot, those with queue-apartments are essentially stuck/difficult position if they want/need to move) to rent. Our system with two markets (a rent-controlled one which require years of queuing (for example 5 - 6 years for a shitty apartment in Stockholm's worst areas, way more for anything decent, and a lifetime/never for anything really attractive) and a free market) is firmly dysfunctional, though abolishing that system isn't a good option either. We just need the state to take control and flood the entire market with cheap decent units (preferably without rent control to increase movement).
You forgot to mention the fourth: years of unrestricted immigration from the Third World.
1. The interest rate is a global thing and despite what they tell you, more or less out of the central banks control. Interest rates are now poised to raise mainly due to demographics, the biggest bond investment funds are pension funds that now have started to shrink due to the huge number of 60+ people retiring and withdrawing instead of paying into the funds... it's just basic math and inevitable...
2. Publicly owned and rent controlled apartments are also a subsidy. Besides, the publicly owned housing they sold to their tenants sold for 4-5 times what it cost to build new houses, for every apt building they sold they could have built 3 more with money to spare, but did they? the electricity subsidy was not only for those that owned their house/apt, it was for everyone but had a minimum limit on consumption that basically left those in apartments out, owned or rented... This next round will however, cover everyone. But yes, I do agree on the stupidity of the interest tax deduction, as it only encourages wsteful spending.
3. the alternative cost of renting has definately added to the housing bubble, as many only can get newly built apartments that have a very high rent, and especially if you are a family in need of something bigger than a 1-2 bedroom apt, the math wss simple, and to some extent still is. As a bonus you had a greater choice of where you could live, and you got the chance to do a luxury renovation for borrowed money that cost almost nothing... (that last bit was sarcasm, nonetheless the truth...)
In short, the prices will level off then rise again in a few years. There is no way they’ll let the average person own a house again.
I fucking hope so, but the Tories will do everything in their power to protect their precious housing prices.
Then get a dinghy and go claim asylum in Sweden.
This issue is that in a lot of European countries a huge part of who is buying housing does not resort to mortgages, like foreign buyers and investment funds focused on renting. So prices won't go as low as they possibly could while credit becomes more difficult to obtain for common people.
so instead of chinese money(canada), often american money ruining market in europe and keeping houses empty if necessary, coz for them its no problem. we have this weird problem in modern world that there are enough housing but still people are in danger of getting to live in ditch.
The issue is that you actually believe that. Foreign buyers 😂😂 Everyone buys real estate using credit, because it's one giant Ponzi scheme. Real estate is crashing literally everywhere, US, Canada, and many more countries to come.
@@greenl7661 I specifically wrote "mortages". Still, I hope you're right.
I'm not religious, but I'll pray that it bursts ASAP
Being a Swede, I have definitely seen the trend of people borrowing more and more, massively bloating housing prices as the interest rates went down. Many people just don't have the financial know-how of how to deal with skyrocketing interest rates in an unforeseen future. This has created a housing bubble with overpriced property. A bubble which bursts as soon as interest rates go up, since people often have quite luxurious consumerist lifestyles with slim margins, living on a month-to-moth basis. If you are frugal in Sweden, it's actually quite easy to own your own housing after working a couple of years. You just need to learn how to NOT spend your entire income on unnecessary products and luxury goods.
Personally, I was able to buy my own apartment in Malmö at the age of 30 (no loans). Today I have a TOTAL monthly cost of 170EUR, with everything included, even internet and home insurance. Sure it's a studio apartment in Malmö, the third largest city. But I could easily buy a 3-room apartment together with a partner with similar financial situation. And because of my minimal expenditure nowadays I have quit working and started a game studio instead, working creatively on the things I love with no income until I can sell my first game. And this has only really been possible since I was frugal in my late 20's and my 30's.
As a fellow Swede that grew up in Stockholm I think you'd have to make a difference where you actually get the house or apartment. The average price of an apartment in Malmö is 33.000 SEK per square meter while in Stockholm the average price is 82.000 SEK per square meter. The national average is 45.900 SEK. Obviously if you want a home in a city like Malmö then it is not really that bad as it has some of the cheapest homes you can find in Sweden. But try your luck in a more attractive location like Gothenburg or Stockholm and it is a whole different story and you will have to pay twice or maybe even triple of what you would have to in a city like Malmö.
Right now I live in a small city in China and even here the price of a home is higher than in Malmö. In any case getting an apartment at 30 with no loans is an achievement in itself just saying it is well below the national average when it comes to home prices. Even if you do have the financial know how getting an apartment in say Stockholm is a whole different story.
@@zjeee I mean, of course it depends on where you live. and I think both Stockholm and Gothenburg affect the national average quite heavily (due to having seriously high prices, + housing a substantial amount of Swedens population). I would argue that the rest of Sweden generally has lower living costs than Malmö. The main reason why Malmö is still quite cheap is because the municipality has always been run by left leaning politics, which have somewhat been able to keep the status quo of affordable housing due to regulating prospecting and expansion. In Stockholm in particular, housing has become much more of an investment and capitalist venture. Also, with very limited space prices naturally skyrocket. With this being said, if you are a digital nomad, you can quite easily get a whole house for 40,000EUR in rural areas of Sweden, like Värmland, or why not Övre Kalix. :)
To those who are happy about the bubble, please don't be so soon,
It would be better if the crisis ended before the bubble, so people will have more money to spend in things like houses
It's the same problem China is facing. Just too many people use flats as an investment for long term rent instead of using them for living. So since less flats are occupied due to competition - prices are falling.
No way comparable in scale though.
Totally different. In China the only way you can reliably invest is by buying a flat. In Sweden people tend to invest in the stock market not flats as the stock market provide a faster and more reliable income. China has 65 million empty homes, that is enough to put all the French into a home. In Sweden the apartments are usually not empty but are rented out. Also in China you NEED to own an apartment to get married and to send your kids to school so home ownership in China is above 90%. In Sweden it's not even above 65%. Swedish apartments are dropping in price due to hiked interest rates. Prices in China are dropping because housing companies are going bankrupt are selling their units at a massive discount to pay their loans and the fact that China has more apartments than it actually needs because a lot of people buy apartments as an investment in China not to actually live in.
@@MegaBanne sure, Europe has much less room for shady borrowing but it all wouldn't fall if wealthy people would not create demand for "empty" apts.
@@zjeee got you
@@IlyaReva
Regulations would do that.
You forget that the prices rose 20% from 2020-2022. If this air goes out it will still look like a pudding...
I am surprised how the UK is only dropping by 10%. The mortgage rates are high, incomes are low, building quality is largely substandard. As an example, most standard buildings in London are probably 30% overvalued by the sheer amount of non-investment, lack of renovating and need to bring the up to standards.
Not sure housing crisis is the right way to view the situation when we have had freakishly low interest rates for so long!
I plotted the chart of interest rate, raw and growth rate, and it doesn't match between countries. Maybe you should see who had bought those houses. My hunch is Chinese buyers dried up. This reflects in the countries I work in where cheap to medium houses got cheaper but luxury houses price as sold remain the same. I find that buyers aren't locals, but Arab - presumably oil baron. Chinese has a habit of buying houses as investment so they care less about what house than just buy a house, so what they got hit by recently will reflect on their investment plan.
Wouldn’t falling home values only adversely effect those who own property as a speculative asset and landlords? I don’t think regular people check the market value of their homes all too often and don’t feel the depreciation of an asset that doesn’t pay dividends unless they plan on selling.
The issue is if they have taken too big loans, with a floating rate, they are now starting to pay a large chunk of their income on the monthly rate and if they can't afford it, they have to sell. If the market is crashing they might need to sell at a loss, meaning they can't pay of their loan and can't get a new one ett
Bought an apartment in Stockholm in October and got 5 main takeaways regarding the Swedish housing market and the consequences on the individual :
1) The housing prices have been artificially inflated by low interest rates for years and prices increased by over 20% during the pandemic. What we see now is a adjustment to reality.
2) The high prices have crowded out financing for more productive investments. You get rich from owning a house, not working. This is detrimental for the economy at large.
3) Young people will still have problems getting a house. Before they were locked out from loans due to high prices, now they are locked out by high interest rates.
4) Falling prices will hit home owners but the high rates combined with 30-year high inflation and a crashing currency is what will take the toll on the Swedish economy and individuals.
5) Raising interest rates will at this time only have marginal effect on the inflation as most of it is driven by energy prices, food and fuel. Not people buying properties like crazy. People need houses to live, not as an investment.
Calling this a crisis is like calling chemotherapy poison
As a house owner, I'm begging for the housing bubble to burst, so that we can come back to treat housing as a necessary commodity and not an investment...
I just want them to build more high rise apartments so I can move without sitting in que for twenty years.
Them? Who is "them"?
@@JanBruunAndersen every politician ever. So that's what I vote for
Move out of Stockholm, the housing que is just a couple of months outside the capital.
@@zjeee that does not change the fact that they should build more. I agree with the "juste move" statement. But I also actually want to fix the problem
@@zjeee Uppsala is also crazy and I don't want to have to commute two hours a day. I will probably not work in neither city for this reason but we'll see
There´s a reason, why in economics the "crash" is called a "correction" - because it corrects a bubble that has been growing on a false notion of never ending cheap growth.
Honestly, I think a housing crash would be more beneficial to prospective buyers than you're suggesting, due to an increased prominence in landlords in the housing market and their apparent multiplicative effect on supply.
See, while what was said in the video on the wealth effect is true for normal homeowners, when landlords see improvements in the economy turn into increased property value (especially since they collect some of that value), they tend to take their extra spending on more property, lowering supply for other buyers and increasing property value faster than the economy improves. This is a big factor in why home ownership is many countries is a pipe dream.
Theoretically this means the opposite would also be true. As the market falters, their property would lose value and they'd collect less money to buy property, raising supply twice over and causing housing prices to fall faster than the rest of the economy.
(Though this is just a theory. We'd have to see how a housing crisis like this actually plays out to see if my hypothesis comes true. It didn't in 2008 after all; but that was thanks to the extraordinary circumstances of the massively inflated housing prices keeping those housing from being affordable even as their value fell, among other factors.)
Yeha it would be great if some landlords wen't bencrupt and their housing could be sold off.
Maybe having the whole economy supported through a trickle-down from homeowners wasn't the best idea to begin with?
In Sweden there is also a factor causing reluctance towards longer fixes on rates, and that is that banks are allowed to claim full renunerance on lost interest if you cancel your mortgage premature (if you need to sell to buy a larger house or flat or move to another city for new job). These fees can be quite extensive. Also with several fixed mortgages with different end-dates, you cannot change bank because these “interest difference fees”.
This makes it very unfavorable to have fixed rates for many year contracts.
If some blokes in RUclips predict it, you can be certain that it won’t happen or it’ll be very mild.
Another thing to keep in mind is that as a homeowner your unlikely to know the exact value of your home at any given moment, it's not like stocks where you can see your portfolio updated daily. If my apartment falls in value 10% I'm unlikely to know that until I want to sell unless I pay close attention to the surrounding listings. I think a bigger worry is the rising mortgages than any sort of wealth cycle.
The bubble grew to an absurd size. If you check historical data, 30 years ago it was much cheaper to buy a house, even with a high interest rates. It’s ridiculous to see that a flat costs about 500 k or more, when the build cost for it is 50 k.
Housing is a right, not a speculative investment!
As a Swede I love when foreigners brings attention to Swedens HUGE problems. Sweden is a prime example of politicians absolutely destroying a nation! Basically whatever the Swedish goverment is doing, do the opposite and yall will be good 👍🏻
Even though interest rates are almost at 7%, house prices still haven't moved a bit in my area yet. I hope the bubble bursts soon.
Its probably mostly in Sotckholm.
It's amazing how well Sweden spun it's previous disaster of a housing market. Getting an affordable rent contract in any of the larger cities could take up to a decade and housing prices were constantly growing. One of my friends who recently moved to Stockholm was living in part of an apartment with several other people (an arrangement that's technically illegal and reminiscent of Russian war communism) because there weren't any other housing opportunities. I genuinely thought that was what this video would be talking about, not the fall in prices that might start to remedy this!
One can only hope and dream of a house price correction. If people weren't paying so much for shelter they could take some of that cash and spend it on goods and services and keep the economy going.
A 30% drop here in the UK would be a good start.
The housing bubble was insane even after the price drop they are still, mostly, overvalued by a lot at least in Sweden.
Houses have been overvalued in Sweden for a very very long time. This 17% decrease is a drop in the bucket, houses are still extremely expensive here compared to salaries. 20 Square meter apartment in central Gothenburg (second largest city) costs 2.7 million krones. The average salary after tax is rightly under 300 thousand krones per year. That's excluding the 25% VAT we pay on all purchases.
The big issue with home ownership is, that not the general public is buying most of the houses, but rather big companies. An these were in a feedback loop of buying and selling houses to each other that increased the prices so much.
No. It is humans. 90%++. It's just some of the public believe the fairytale that is big companies. As it makes their tummies feel warmer with spite.
Also, they buy with cash and unlike common people, won't be affected by limited mortgages.
@@danielwebb8402 Depends on Nation and location.
@Barb The Great
Cash that was just sitting there? Or otherwise would earn returns on other investment/ today's higher interest rates. So the opportunity cost of
Housing vs High interest rates
Is the same as for an individual
As it was last year
Housing vs low interest rates
Same for individuals
The general understanding of the concept of return on capital is sad
@@danielwebb8402 I suspect even bigger companies doing that dont hold huge piles of cash on bank account but trusted on cashflow and getting loans... with excuse of inlfation many have bumped rents over 10% but getting loan is more difficult as banks are more careful. Some of these could even crash now once cash runs out if they were risking too much. For huge US based investment companies this aint problem unfortunately, "too big to fall". Blackrock was buying huge amounts of cheap even public housing in some swedish cities and instantly bumped rents like 10%. This was around 2020.
I only brought my house 18months ago. A 10% decrease in property value means if I sell after A 10% drop I still leave with more money than I paid for the house.
Not a flex, but people weren't able to buy a first home at the prices 18 months ago. That's without the consideration that lenders are processing first time buyers at a 4%+ rate.
Im a Swede and am looking forward for a crash. Me and my partner is looking for our new house but everything is to expensive for us.
If the housing bubble poped we might actually afford one house this decade! :D
It'll take many years to bottom, housing is the latest liquidating asset.
wtf is this "crash"? Houses are ridiculously overpriced. 17% is basically a staff discount in retail.
Sweden also has a shortage of housing so a drop in prices may reduce the incentive to build more homes for renting, possibly building in a sharp price escalation in a few years. It will be interesting to see what the effect of this price drop will have on the rental market.
Mostly just a shortage in the popular cities. There are entire towns getting depopulated in other parts of the country.
@@DaDunge Yes, my sister moved to Sweden, Falun in Dalarna, 5 years ago and at first she had to live in a village about 30min away before, after 6 months, she found a place in the city where she worked.
I wouldn't call a "housing market crash" a crisis.
The bubble was a crisis, this is just the solution to that.
How is house prices going down a "crisis"?
I've been talking to people about buying property in Germany for the past few years, and everyone with any sort of knowledge on the subject has been saying housing prices here are in a bubble. This doesn't come as a surprise to me at all
Doesn't the 'Wealth effect' rely on the notion that people mainly/solely look at their house as a financial asset?
Because if it is, most people will not act according to it. A house will stil have a lot of value, even after its price crashes as its use as a financial investment vehicle wanes, because most people don't like sleeping on cold asphalt for some reason.
Dad who lived more then 50 years in Sweden finally paid of his loan. Reason he rushed now is the rates.
I can imagine the euro would be added after this bubble.
I want a 50% crash, then maybe I’d be able to finally afford a home 😢
The interest will be so high by then so you wont afford it anyway