Housing prices in Sweden, Finland and Norway can be thrown, which would put some of the strongest recoveries in Europe and threaten to return to their economies in recession.
The property market in Sweden could fall as 20 percent of borrowers with loans biggest difficulty with the payment of its debts, which are up to 46 times greater than their disposable income, considered by the Royal Bank of Scotland. The Central Bank of Norway said that low interest rates carry a risk of overheating of the property and credit markets in the country while in Finland said the housing market might be shaped balloon.
"I am very worried," said in an interview with Finnish Finance Minister Jyrki Katainen. 'Maybe there is a housing bubble in Finland. There is a risk that mortgage costs are too low. "
Housing prices in the three countries increased last year, although their economies are shrugged, and unemployment rose, sparking imbalances that must now be corrected. Higher interest rates in Sweden may lead to failure of some borrowers, said the RBS. The cost of loans in Finland, a member of the euro area does is determined by the European Central Bank, which makes more difficult the management of the local economy.
Housing prices in Swedish, the largest northern economy grew by 7% annually for the three months to July, which is the 15th consecutive period of increase. In Norway, it has risen by 19.6 percent from the end of 2008 until the past quarter. In Finland the prices of existing homes rose by 10% annually the past quarter, having recorded growth of 11.4 percent for the three months to the end of March.
Lars Magnusson, Director of the National Board to guarantee loans to the Swedish Finance Ministry, said in an interview a few days ago that housing in the country will lose a fifth of its value in the coming three to five years.
"A drop of 20% would probably cause or contribute to the deepening of re-recession," said Parr Magnusson, chief economist for RBS economies in northern Stockholm. "Re-recession may occur in all cases, the deterioration of international conditions for growth."
Liabilities of households in Sweden have equal 167% of disposable income at the end of last year to 104 percent a decade ago, according to calculations of the Riksbank. In Finland, this ratio has increased to 107% at the end of last year from 65 percent in 2000, according to central bank data. In Norway, the debt ratio is expected to increase to 197% of disposable income this year, which would have increased by 14.5 points compared to 2005, calculated by Norges Bank.
The main interest of the ECB of 1% may be inadequate for the needs of the Finnish economy.
"To prevent balonizirane would be better, of course, if Finland could become self-determined monetary policy," said Mikko Force, an economist at Roubini Global Economics in London. "Yet this is not enough in itself, as they say and the central banks in Sweden and Norway. Regulation is perhaps the best tool. "
Otherwise, the three economies are about to commemorate one of the most successful recovery in the EU. Finland's GDP may grow by 1.5 percent this year after declining from 8 percent in 2009, according to government estimates. In Sweden the central bank expects economic growth from 3.8 percent this year after last year's contraction of 5.1 percent. GDP in mainland Norway will increase by 1.75 percent this year after a decline of 1.6 percent last, predicted the central bank there.
According to RBS, however, risks to the real estate market today are greater than before the credit crisis, as well as households are more indebted and less unprotected from interest changes.
The property market in Sweden could fall as 20 percent of borrowers with loans biggest difficulty with the payment of its debts, which are up to 46 times greater than their disposable income, considered by the Royal Bank of Scotland. The Central Bank of Norway said that low interest rates carry a risk of overheating of the property and credit markets in the country while in Finland said the housing market might be shaped balloon.
"I am very worried," said in an interview with Finnish Finance Minister Jyrki Katainen. 'Maybe there is a housing bubble in Finland. There is a risk that mortgage costs are too low. "
Housing prices in the three countries increased last year, although their economies are shrugged, and unemployment rose, sparking imbalances that must now be corrected. Higher interest rates in Sweden may lead to failure of some borrowers, said the RBS. The cost of loans in Finland, a member of the euro area does is determined by the European Central Bank, which makes more difficult the management of the local economy.
Housing prices in Swedish, the largest northern economy grew by 7% annually for the three months to July, which is the 15th consecutive period of increase. In Norway, it has risen by 19.6 percent from the end of 2008 until the past quarter. In Finland the prices of existing homes rose by 10% annually the past quarter, having recorded growth of 11.4 percent for the three months to the end of March.
Lars Magnusson, Director of the National Board to guarantee loans to the Swedish Finance Ministry, said in an interview a few days ago that housing in the country will lose a fifth of its value in the coming three to five years.
"A drop of 20% would probably cause or contribute to the deepening of re-recession," said Parr Magnusson, chief economist for RBS economies in northern Stockholm. "Re-recession may occur in all cases, the deterioration of international conditions for growth."
Liabilities of households in Sweden have equal 167% of disposable income at the end of last year to 104 percent a decade ago, according to calculations of the Riksbank. In Finland, this ratio has increased to 107% at the end of last year from 65 percent in 2000, according to central bank data. In Norway, the debt ratio is expected to increase to 197% of disposable income this year, which would have increased by 14.5 points compared to 2005, calculated by Norges Bank.
The main interest of the ECB of 1% may be inadequate for the needs of the Finnish economy.
"To prevent balonizirane would be better, of course, if Finland could become self-determined monetary policy," said Mikko Force, an economist at Roubini Global Economics in London. "Yet this is not enough in itself, as they say and the central banks in Sweden and Norway. Regulation is perhaps the best tool. "
Otherwise, the three economies are about to commemorate one of the most successful recovery in the EU. Finland's GDP may grow by 1.5 percent this year after declining from 8 percent in 2009, according to government estimates. In Sweden the central bank expects economic growth from 3.8 percent this year after last year's contraction of 5.1 percent. GDP in mainland Norway will increase by 1.75 percent this year after a decline of 1.6 percent last, predicted the central bank there.
According to RBS, however, risks to the real estate market today are greater than before the credit crisis, as well as households are more indebted and less unprotected from interest changes.