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The combination of removing the wealth tax and the introduction of a 30% rebate on all interest costs for individuals have really combined to clusterfuck the Sw

The combination of removing the wealth tax and the introduction of a 30% rebate on all interest costs for individuals have really combined to clusterfuck the Swedish housing market. Now, the interest rebate seems politically impossible to touch, even long term and through minor transitioning. Home ownership is so important to the economy and affects so many voters, that the property owning class always must be looked after. People have been talking about the bubble bursting for years now, but it's only in the past year or so that the decline truly has been expected. Only a few weeks ago, there was an article in a major paper about a couple who quinnied about not being able to sell their house with the expected 1000% profit (over 30+ years). How ever would they manage, once they'd sold the house, bought an apartment, and didn't have the cool million SEK to splurge on whatever people in their 70s enjoy?

pathy 9y ago
The interest rate deduction has been around longer than that. In 1990/1991 it was reduced to 30% from 50%. Low interest rates, the deduction, no wealth tax and a massively reduced property tax all contributed to this bubble though.
deleted 9y ago
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tonyedgecombe 9y ago
We got rid of mortgage interest relief in the UK so I wouldn't rule it out completely.
- soVeryTired 9y ago
  Doing so cratered the housing market in '89. Other countries watched and learned.
  - tonyedgecombe 9y ago
    I think it was more to do with soaring interest rates. I remember it all rather well as I had just bought my first house.
  - rsynnott 9y ago
    We also got rid of it in Ireland when the housing market had just crashed. House prices are now rising alarmingly quickly again, regardless.
pimmen 9y ago
I absolutely hate speaking to Swedish people who invest all of their retirement savings in their home. It just breaks my heart to know that they are taking on a very high risk by putting all of their eggs into one, figurative basket when other types of investing are not only less risky but also often present more of a reward too. And, add the fact that investing in your house is one of the least helpful investments for creating new jobs and wealth for future generations. The people who had this idea have my pity but I won't refrain from using their story as a cautionary tale.
- robinwassen 9y ago
  How do they "invest" in their home? Renovate it to the max, keep buying a more expensive one or paying off your loan?
  - pimmen 9y ago
    They buy more expensive homes than they need (or stay in the one that housed a family of four way after their kids have moved out) and pay off the mortgage. That's "saving" for retirement; they expect to get the money they've payed on their mortgage back when they sell it. Some practically only pay off the interest because we can do generous deductions off it and we have low demands of paying off the principal (or at least we used to have, now the Department of Finance is advising the government to require that banks make higher demands of paying back the principal) and why should I pay off the mortgage in full if the property prices always go up? At least that's the reasoning. I have nothing against paying off your loan, but seeing it as your one and only retirement investment is something I have serious problems with. You should live where you are most comfortable living, I don't want people speculating in their homes on a casual basis "knowing" it always pays off. If you're going to really invest in your home, renovate a floor and rent it out. That way, you're contributing to the economy, you're not just speculating you're value investing and you know what the revenue stream of your investment really is. I had the privilege of growing up in a wealthy household with 7 bedrooms and after me and my brother moved out my parents decided three rooms was enough and converted the house into three apartments, living in one and renting out the other two. Many of the neighboring families however don't like the idea since it means work, but they also don't want to move into something that won't grow as much over time. They're staying put even after the kids have moved out in hopes of cashing in right before retirement.

pathy 9y ago

The interest rate deduction has been around longer than that. In 1990/1991 it was reduced to 30% from 50%. Low interest rates, the deduction, no wealth tax and a massively reduced property tax all contributed to this bubble though.

deleted 9y ago

[deleted]

tonyedgecombe 9y ago

We got rid of mortgage interest relief in the UK so I wouldn't rule it out completely.

soVeryTired 9y ago
Doing so cratered the housing market in '89. Other countries watched and learned.
- tonyedgecombe 9y ago
  I think it was more to do with soaring interest rates. I remember it all rather well as I had just bought my first house.
- rsynnott 9y ago
  We also got rid of it in Ireland when the housing market had just crashed. House prices are now rising alarmingly quickly again, regardless.

pimmen 9y ago

I absolutely hate speaking to Swedish people who invest all of their retirement savings in their home. It just breaks my heart to know that they are taking on a very high risk by putting all of their eggs into one, figurative basket when other types of investing are not only less risky but also often present more of a reward too. And, add the fact that investing in your house is one of the least helpful investments for creating new jobs and wealth for future generations. The people who had this idea have my pity but I won't refrain from using their story as a cautionary tale.

robinwassen 9y ago
How do they "invest" in their home? Renovate it to the max, keep buying a more expensive one or paying off your loan?
- pimmen 9y ago
  They buy more expensive homes than they need (or stay in the one that housed a family of four way after their kids have moved out) and pay off the mortgage. That's "saving" for retirement; they expect to get the money they've payed on their mortgage back when they sell it. Some practically only pay off the interest because we can do generous deductions off it and we have low demands of paying off the principal (or at least we used to have, now the Department of Finance is advising the government to require that banks make higher demands of paying back the principal) and why should I pay off the mortgage in full if the property prices always go up? At least that's the reasoning. I have nothing against paying off your loan, but seeing it as your one and only retirement investment is something I have serious problems with. You should live where you are most comfortable living, I don't want people speculating in their homes on a casual basis "knowing" it always pays off. If you're going to really invest in your home, renovate a floor and rent it out. That way, you're contributing to the economy, you're not just speculating you're value investing and you know what the revenue stream of your investment really is. I had the privilege of growing up in a wealthy household with 7 bedrooms and after me and my brother moved out my parents decided three rooms was enough and converted the house into three apartments, living in one and renting out the other two. Many of the neighboring families however don't like the idea since it means work, but they also don't want to move into something that won't grow as much over time. They're staying put even after the kids have moved out in hopes of cashing in right before retirement.