STOCKHOLM, June 14 (AFP): The International Monetary Fund (IMF) Friday urged Sweden to cool its booming real estate market, which is causing a high level of household debt, warning of an "increasing concern" of financial instability.
House prices rose by as much as 12.5 per cent in April compared to a year earlier for some types of homes, the Washington-based institution said in a preliminary annual report on Sweden's economy.
The high level of credit growth in Sweden pushed up household debt in the country to nearly 175 per cent of disposable income in 2013, the IMF warned, suggesting three remedies.
First, it suggested introducing a maximum period for people to take out mortgages, in a country where many households pay back their loans so slowly that they hardly dent them.
Last year, the IMF slammed Sweden's average mortgage amortisation schedule for the more solvent households, which was at 140 years.
Second, the fund proposed an unspecified limit to monthly payments based on income.
The final proposal was to increase the minimum deposit on a house to 25 per cent of the total price, from 15 per cent currently.
The IMF also urged Sweden to accelerate new construction, arguing that "the demand for housing is outstripping supply, reflecting ongoing rapid urbanisation and immigration trends".
The Fund lowered its 2014 growth forecast for Sweden by 0.2 points to 2.6 per cent.
IMF urges Sweden to cool down real estate market
FE Team | Published: June 15, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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