High mortgage debt and a broken rental system is taking its toll on a country once seen as the example for others to follow, says Brett Christophers, an economic geography professor
By all accounts, one important factor behind the Swedish economy’s travails is a large fall in construction, brought about by rising interest rates. But the biggest reason is falling consumption. Household finances are under growing pressure and belts are being tightened. What was ominous about the Aftonbladet report was the indication that the tightening is not just metaphorical.
How to account for these particularly severe housing effects? Sweden’s central bank, the Riksbank, has increased interest rates, albeit in a less aggressive manner than the Federal Reserve or Bank of England. This has decisively affected the housing market. As commentators have, both the quantity and type of Swedish mortgage debt have played a key role in this.
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