41 ms·

What broke Sweden? Real estate bust exposes big divide

229 points by SirLJ 4y ago

ftyers 4y ago
https://archive.ph/rLm7B https://archive.ph/rLm7B
oblio 4y ago
Paywall :-|
- deleted 4y ago
  [deleted]
sgt 4y ago
Sweden is broken? That's news to me. Why isn't this in the media?
- ChuckNorris89 4y ago
  >Why isn't this in the media? Not Swedish but I assume the ones who run the real estate interest groups are also hand in hand with those who own mainstream media so they have no interest to dig up dirt on them and will turn a blind eye. I assume Germans initially also asked themselves why isn't the Wirecard fraud in the local media and only reports on it come from the US. Influential people in a country tend to scratch each other's backs.
- rejectfinite 4y ago
  Housing is yea.
- tpmx 4y ago
  Young people are upset they can't live centrally in the capital for cheap. Same story as everywhere else. Now go forth with the ritual flogging, er, downvoting. (I live and work in the countryside of Sweden. I recommend it.)
  - ChuckNorris89 4y ago
    Sure, but try dating and building social circles while living in rural areas as a single 20-30 something year old. Of course young people want to live in dense walkable areas where it's easy to find other like minded people. Isn't Swedish population also statistically one of the biggest sufferers of loneliness in the world and also one of the largest consumers of antidepressants? Or was that Finland? I'm not sure.
    - tpmx 4y ago
      There are plenty of more affordable, densely walkable city areas in Sweden. Every single city in the country is built this way, from the smallest to the largest. That's not the factor. The factor at play here is that these all these people want to have a cheap apartment in the same 10 km^2 that's designated as the cool place. When that can't happen because of physics, they claim society is breaking down. > Isn't Swedish population also statistically one of the biggest sufferers of loneliness in the world and also one of the largest consumers of antidepressants? No idea, but it sounds a bit like reverberations from Dwight D. Eisenhower's 1960 speech where he said that "sin, nudity, drunkenness and suicide" in Sweden were due to welfare policy excess, which then quite incorrectly caused americans to correlate Sweden with suicide and depression for many decades. At the moment the suicide rate is higher in the US than in Sweden but we're relatively similar in this statistic. https://ourworldindata.org/grapher/death-rate-from-suicides-ghe?tab=chart&country=SWE~USA https://ourworldindata.org/grapher/death-rate-from-suicides-...
      - tannhaeuser 4y ago
        > all these people want to have a cheap apartment in the same 10 km^2 that's designated as the cool place. Which, incidentally, is cool because not everyone's living there ;) Don't know about Stockholm, but I guess those places are the same 19th/early 20th century quarters like in every other European city build for renting out to an upward moving middle class and popular exactly because they're meeting the representative needs of their tenants then and now.
- maximilianroos 4y ago
  > Why isn't this in the media? Like on bloomberg.com?
- imwithstoopid 4y ago
  [flagged]
- smnrchrds 4y ago
  https://www.butajape.com/comic/why-wont-they-cover-this/ https://www.butajape.com/comic/why-wont-they-cover-this/
- refurb 4y ago
  The bigger questions for you should be - "what else is the media not covering" and "why is the media covering what they do"? Think hard about those questions next time you read a news article.
- refurb 4y ago
  Did you know about the 100+ grenade attacks in Sweden over a period of 6 years? https://en.wikipedia.org/wiki/List_of_grenade_attacks_in_Sweden https://en.wikipedia.org/wiki/List_of_grenade_attacks_in_Swe...
- mclightning 4y ago
  There is definitely some opinion-making happening by news agencies, to crash the housing market.
ChuckNorris89 4y ago
Real estate can either be a lucrative investment or it can be affordable. Why are people continuously acting shocked when they realize it can't be both? And why are elected politicians everywhere continuously shrugging their shoulders as if the housing market is somethin completely outside of their control.
- pessimizer 4y ago
  > And why are elected politicians everywhere continuously shrugging their shoulders as if the housing market is somethin completely outside of their control. This isn't what's happening. Any politician that promised to lower house prices would be demolished by middle class people who a) think that additional wealth from rising house prices is their just reward for being wealthy enough to own a house, and b) will be in deep shit on their mortgage if house prices go down, because mortgages are just highly leveraged investments. edit: whenever house prices seem like they might go down, governments inject huge amounts of tax money into the housing market. The people that tell us in the US that cancelling student debt is a subsidy to the rich will never fail to send direct subsidy to homeowners and prospective homeowners. In that way, government interventions into the housing market only happen as a bubble is popping, and their intention is to maintain bubble pricing.
- havblue 4y ago
  It's funny that it was sold as "affordability". Is it really more affordable to have a mortgage that lasts twice as long? Can we really consider interest only to be home ownership? You don't own that home, the banks do, Maverick!
  - brabel 4y ago
    If you invest your money on anything that gives , say, 5% yearly returns on your money, instead of paying off your mortgage, which used to be at less than 2% (but is not getting beyone 4%), you're just better off. Say you start with a 10,000 mortgage, and your payment per year is 500, not including interest. By the end of the year, you'll have a 9,500 mortgage left. If you just invested the 500 and only paid interest on the mortgage (which was common in Sweden until a few years ago), you'll still have a 10,000 mortgage, but you have 525 in your pocket. You could now go and pay off some mortgage, resulting in you having now only 9,475 left (i.e. you're better off)... but why would you do that? Just keep investing that money!
nivenkos 4y ago
The main problem is the terrible rent control system - with a lucky few getting rent-controlled first-hand contracts, and everyone else facing a cut-throat almost completely unregulated market of sub-letting. Rent control never works.
- ChuckNorris89 4y ago
  Of course it doesn't. The only way to bring down prices is to build more supply than the demand, but for some reason this elephant in the room is always ignored because always a million reasons come up against it, mostly being just NIMBYsm in disguise. Keeping a limited supply artificially price capped through regulations, sounds good at first, and will most likely be popular with clueless voters, but it will lead to shortages down the road and only the lucky few with money or connections will be able to afford. We had that in communism, except ironically, not with housing but with food and goods. Now the west has the opposite problem, everyone has plenty of food and iPhones, but no housing. Have Swedes never learned about this and the functioning of supply/demand in their excellent school system?
  - varispeed 4y ago
    > but for some reason that route is never explored. The reason you are looking for is called corruption. There is a very strong lobby of landlords and the rich treating residential housing as a store of value. It offers better returns than keeping money in the bank and it is safer, especially if you are from a country where your assets could be in danger - it's much harder for foreign states to take control of the property, sell it and recover the monies. Here in the UK we have the same problem. Good percentage of the ruling party (and opposition) are landlords, there is a ton of foreign money coming in buying up properties left and right and they don't even care if they are rented out, because empty property gives good enough return. We even have banks start to move in this business as well. It has gone completely mad. But since big money is all over it and our security services are not interested in looking into it, nothing is going to change it will only get worse.
    - joshuaissac 4y ago
timkam 4y ago
A key problem in Sweden -- besides the weird interaction of privatization and legacy over-regulation -- is that the current inflation and rising interest rates break the social contract: a relatively even salary distribution allowed many people to have a solid middle-class life style, recently albeit with never-ending mortgages. Now, the interest rates are too high for these mortgages to be even superficially sustainable, people have less money at hand to pay for them, and there is no political will to relief the working and middle class, which means many will slide down the social ladder. As an immigrant living in Sweden I fear that the country will soon be pretty unattractive to live in for most 'internationals' who have a choice.
- moltar 4y ago
  I think you could say exactly the same story about Canada. And imagine many other countries soon. Interest rates will spoil the party.
  - brailsafe 4y ago
    Canada is fucked
  - f1shy 4y ago
    And Germany, ans so many other countries
  - theshrike79 4y ago
    The difference in Sweden is that they gave out ridiculously long loans for housing. Like 60-100 years. The kind that was never meant to be paid back.
- jokethrowaway 4y ago
  It's the same everywhere, not only in Sweden. What a surprise. The government got your taxes AND screwed you with inflation over time. Then COVID happened and they had to print more, postponing and aggravating the crisis. Now it's time to pay and nobody will take the blame. When are people going to rebel?
belorn 4y ago
It should not be a major surprise that the gap between the haves and the have-nots will widen if you have a large compareable influx of have-nots, or to speak more precisely, an influx of new citizens with low social-economic status compared to those who already were ctiziens. In a very dispassionate perspective, it is just plain math. It is going to take time to return back to the same levels as before.
- FpUser 4y ago
  >"It is going to take time to return back to the same levels as before." Growing divide is universal and pending some tectonic changes in the way our society operates there is no coming back.
  - xdennis 4y ago
    > tectonic changes in the way our society operates AI and/or climate change. It may fuck up the planet but at least I'm going to enjoy the housed suffering too.
- ChuckNorris89 4y ago
  >if you have a large compareable influx of have-nots I'm not in Sweden but why are we always pointing the finger at the poor immigrants? Do you think there are no native Swedes being fucked by this real estate market? Granted, having an open borders migration policy is not a good idea when you have a housing shortage. If you're struggling to provide for the locals, then the newcomers will have it even worse and won't like it, leading to more inequality, social divide, unrest and increased crime. But blaming immigrants is always a cheap shot politicians take to blame the demographic without voting rights for the problems they themselves are responsible for. "It's not us who screwed you over with inflation and housing while taking your taxes, it's the immigrants who took your job and house".
  - bilbo0s 4y ago
    So true. Immigration is an entirely separate issue. Conflating it with the fact that hard working Swedes can’t secure good housing only serves to make those Swedes, who are already pissed off, more pissed off. It’s bringing the masses closer to taking to the streets with calls for Madame La Guillotine. Housing needs to be fixed asap in Sweden. (And in most of the western world if we’re being honest.)
patall 4y ago
Not sure about the main story about the article. However, construction on that Ursvik/Rinkby construction site has been very slow since long before the current crisis. I was biking through the neighboring bridge of the one mentioned here (that is about 100m down the road, so much about that new bridge alone enabling crime) for about 8 month and while my way through changed a few times, progress was very slow. (Not that any of the many many construction projects in Stockholm has been fast). What the article misses is that the Swedish Krona has lost more than 10% compared to the Euro over the last year and that, while theoretically making exports more valuable, increase inflation for all import products. Which for me as an immigrant is the main economic flaw in this country: it should have adopted the Euro like Finnland or at least locked the exchange rate like Denmark. But no, false national pride has now made the entire economic down-turn even harder. (One should also note that mortage rate here in Sweden are still surprisingly low. My 3 month fixed rate right now is 3.65% of which I get back 30% via taxes. Hence I am effectivly borrowing at 2.5%)
- nickez 4y ago
  The SEK used to be locked. That lead to another kind of crisis in the nineties. You are right that we should've adopted the euro though.
  - bombolo 4y ago
    "They have all these useless little coins!!" Said the swedes back then apparently completely forgetting about the 50 öre coins and the gigantic 5sek coins.
- chrisco255 4y ago
  The Euro is also doomed. It might have saved Sweden a few months of pain at most.
- cjblomqvist 4y ago
  > But no, false national pride has now made the entire economic down-turn even harder. Or it's more nuanced than that and there are actual benefits (as well as downsides) to having your own currency. It's like Covid. When it went well everybody was cheering and saying how we Swedes were geniuses. When it flipped, we were suckers. Maybe, it's more complex and actually quite a lot about luck and other factors. Another example. Few have historically thought ill of Sweden's long (now gone) tradition of being neutral. One thing that makes it very difficult to be neutral is having a currency that you only control a few percent of.
twodave 4y ago
Interesting undercurrent that the article presents: a Sweden with high immigration has a lot of the same problems as the United States. Maybe living in a utopia is only possible if you first ship away those pesky poor folks. /s
rhaway84773 4y ago
The Sweden story sounds so much like the SF story. Area doesn’t building housing, leading to a massive increase in house prices and a destruction of class mobility as the rich get richer (as their houses get more valuable) and the poor get poorer (as they pay more to rent the same living space). The growing wealth inequality leads to all sorts of other dysfunction including increased crime, worsening services, etc. as the govt cannot raise enough taxes. And finally, instead of solving the fundamental expensive housing problem, opportunists will blame the other. More often than not the other are the victims of the problems. Immigrants in Sweden’s case, and since one can’t blame immigrants for obvious reasons in SF, homeless people in SF.
- deleted 4y ago
  [deleted]
- bequanna 4y ago
  > The growing wealth inequality leads to all sorts of other dysfunction including increased crime, worsening services, etc. as the govt cannot raise enough taxes. Hold up. I don’t think the people of San Francisco grew weary of increasing rents and decided to turn to a life of crime. Most of the “trouble makers” in the Bay Area are recent arrivals to the area and come because of poor policing and the government is generally more tolerant of them.
  - deleted 4y ago
    [deleted]
  - tptacek 4y ago
    This is debunked every time it's brought up. The "trouble makers" you're referring to are local. It is not in fact the case that San Francisco mass-imports its downtrodden.
    - Entinel 4y ago
      Debunked with what data?
    - 4y ago
boringuser2 4y ago
Nobody likes to talk about the effect of moving large populations around globally without the housing infrastructure to support them.
- DevKoala 4y ago
  Seriously. I feel people act naively on these discussions because they are afraid of offending others, but it is common sense that a ~0.3%/year influx of immigrants with low resources over 50 years has contributed in some way to economic disparity in Sweden. Nobody is saying that immigrants are having a negative effect here, it just means that newcomers have an uphill battle versus established families that have been building wealth for decades.
  - boringuser2 4y ago
    Just to clarify your point, it means that the opportunity for people who were the offspring of "historic" Swedish citizens and didn't not already own or inherit substantial wealth (most people) was subtracted due to the large movements of populations. As a result, I don't see why someone would support such a policy.
- Ekaros 4y ago
  Also not to forget globalization moving populations inside countries. Which might be key effect. Globalization caused many industries to die off and basically those communities now have housing stock that is worth very little or is worthless. As the jobs stopped being there and new jobs have been created in other places which do not have the supply of new housing.
brailsafe 4y ago
Can't read the article but I bet it's familiar to any Vancouverite
jdmoreira 4y ago
I'm in the highest percentiles of income in Sweden (public data is available) and it doesn't matter. It's basically impossible for me to afford a house / apartment for my family in the best neighborhoods. What's the point? What is the point of trying to be a high performer if wealth can't be acquired by income? Why would I want to work for anyone in this country? Only way out is equity and that game is even harder to play in Sweden than in the US.
- brailsafe 4y ago
  I'm in Vancouver working remotely for an EU/US company because I couldn't get anything here. At $100k CAD, my partner and I wouldn't be able to afford a modest upgrade to a 1 bedroom condo... anywhere in the city (from a tiny basement studio) without significantly increasing our take home. The place I just visited would require $4000/m after a 20% down payment (which I don't have). If I double my savings in the next year, assuming I don't get laid off next week and go broke again, I'd have enough for a 5-10% down payment and hypothetically require mortgage insurance, plus still not be able to afford the mortgage. But hey, at least the cops won't arrest me for openly smoking crack on the sidewalk, so that'll help me deal with the stress of trying to be a high performer.
  - jmspring 4y ago
    Back in the mid/late 90s Vancouver was affordable and a lot of flats being built. It was still more expensive that the suburbs, etc. but still cheaper than metros across the border. Sometime in the 2000s money started flowing in and those flats I was seeing in place like Kits for $150-$200k were suddenly going up a lot. Rents were also escalating. A lot seemed to be fueled by foreign money. I was looking at relocating at the time and wish I had followed through.
    - brailsafe 4y ago
      Ya that seems to be part of consensus, and consistent with what I'm seeing in terms of when some places were built. The suburbs around Vancouver gradually decrease in price a bit, but for obvious reasons and not enough to make much of a difference. It's like going from $750k for a 1 bedroom to $550k for a 1 bedroom and that's sort of the spread within reason; an absurd gap to be sure I don't mind them, but I'm just thinking about it terms of being able to stay in my community for once.
watrami 4y ago
It seems like it's the same story everywhere I look. Housing is the main driver of inequality and there is little change happening. We have the same problem here in Germany. I am currently living in Munich to finish my CS Master's at TUM and build a startup, and it is absolutely impossible to find anything remotely affordable. I am supported by two startup scholarships and make enough to get by, but no landlord even gives me the chance in the first place after they see my income and plans. Right now I am paying 940€ for ~20sqm, and only because my mom co-signed my contract - which is incredibly humiliating as a 24 year old guy. And even with high-paying jobs it's impossible to get anything remotely affordable. My girlfriend just finished her degree and makes 75k straight out of college and still gets rejected either for her financial situation or because the rental contract is already set to increase 8% each year - which we simply cannot afford. And it's not just Munich. Every city in Germany has this problem. How the hell are we ever supposed to build up some savings, settle down and have a comfortable life? It really feels like being born 15 years too late for this. Germany paid a lot for our education but offers us little reason to stay. We are already looking to move to other places and created a university-wide google sheet where we compare different countries and cities around the world for those kinds of categories. Sorry for the rant.
- maxFlow 4y ago
  > We are already looking to move to other places and created a university-wide google sheet where we compare different countries and cities around the world for those kinds of categories. Could you share a few places at the top of your list? As you yourself pointed out, it looks like the same story is playing out everywhere one looks, especially in the West. Given the current situation, the more I think about it, the more I conclude that going fully remote from a low-COL location may be the better answer. Unfortunately I think this complicates things for founders to raise. Also, this makes me think how utterly unprepared Germany is to receive all those immigrants needed to keep the economy working. Best of luck with your plans.
- G3rn0ti 4y ago
  > And it's not just Munich. Every city in Germany has this problem. Well, rising cost of living is a reality everywhere (it’s called inflation). But Munich is really extreme. You might want to consider moving to Eastern Germany. If you pursue an academic career, you might want to watch for positions in Magdeburg, Greifswald or Leipzig. > How the hell are we ever supposed to build up some savings ETFs (exchange traded funds i.e. index funds) give you better yield than just paying into a savings account. You also might want to invest some percent in more risky positions like BTC and ETH (10%) bc now is a good time to do that. Also give it a couple of more months. Housing price increases are already decelerating and start to decline in some areas. The last 10 years were exceptional in low interest rates and money printing in the EUR zone. If you can avoid it, don’t own a car — it’s always a money drain. :)
jamesgill 4y ago
I don't think this is a housing/real estate story as much as it is a story of immigration impacts. Rinkeby has about 20k residents--and ~90% of them are immigrants (1st or second generation). Nearly all of those arrived in utter poverty, and arrived in a relatively short period of time. Understandably, large amounts of immigration is coupled with extreme poverty and escalation of crime, rioting, etc. But there are additional implications of terrorist cell links, and more. It's a complex story.
medion 4y ago
The answer is very simple - more construction - and to do so, we need deregulation, density, training and innovation.
- adverbly 4y ago
  > more construction - and to do so, we need deregulation, density, training and innovation. Doesn't even need to be that complex: land value tax would do it(and solve many other issues as economists have been saying for decades). Land scarcity shifts late-stage market incentives away from building to rent seeking and speculation. LVT would fix these incentives. It is badly needed in most first world countries at this point.
EnglishmanITGuy 4y ago
[flagged]
- INTPenis 4y ago
  As an indigenous Swede with sleeping problems I find it amusing that these posts and discussions about Sweden are happening when the time is 03:20 here, we're all asleep and can't even defend ourselves. :D
alephnerd 4y ago
Surprised no one on here mentioned estate taxes - Sweden repealed estate taxes in 2005 [0], and as such Sweden has one of the highest wealth (not income) Ginis in the world [1]. Other notable developed countries in the top of the wealth list are Netherlands (€1.3mil exemption from inheritance tax if planned correctly [2]) and the US (no inheritance tax below $12mil [3]). In essence, you are allowing the top 10% to gobble up all the value from the rest of society, and allowing old money to continue perpetuating itself. [0] - https://taxsummaries.pwc.com/sweden/individual/other-taxes https://taxsummaries.pwc.com/sweden/individual/other-taxes [1] - https://www.credit-suisse.com/media/assets/corporate/docs/about-us/research/publications/global-wealth-databook-2019.pdf https://www.credit-suisse.com/media/assets/corporate/docs/ab... [2] - https://practiceguides.chambers.com/practice-guides/private-wealth-2022/netherlands/trends-and-developments https://practiceguides.chambers.com/practice-guides/private-... [3] - https://www.investopedia.com/estate-tax-exemption-2021-definition-5114715 https://www.investopedia.com/estate-tax-exemption-2021-defin...
- ctroein89 4y ago
  Sweden abolished inheritance taxes because the cost of enforcing the tax was greater than the taxes raised, and was passed by a left-wing coalition. At the time, it was considered a success of social democracy to not need inheritance taxes (and in fact, everyone, including the law, referred to dödsskatten - the death tax). 20 years isn’t ready enough time for wealth to consolidate like that via inheritance alone, and similar countries (like Norway and Germany) are seeing similarly rapid raises in their Gini Indexes for wealth, without chances to their inheritance tax systems. Something is broken in Western economies, but unfortunately, inheritance taxes in Sweden aren’t the problem.
  - alephnerd 4y ago
    "The question we set out to answer in this study is how the Swedish personal wealth distribution has evolved since 2007. This year, a right-wing party alliance was elected after a long period of Social Democratic rule and among its first reforms was to repeal the wealth tax ... Our main result concerning wealth inequality in Sweden is that it appears to have increased since 2007. The recorded rise in the Gini coefficient and top wealth shares is about ten percent" https://onlinelibrary.wiley.com/doi/abs/10.1111/roiw.12294 https://onlinelibrary.wiley.com/doi/abs/10.1111/roiw.12294 Note that the study above only analyzed wealth in Sweden over the time period of 2007 (when the wealth tax was repealed, not 2005 as I erroneously wrote in my earlier comment) and 2012. Germany and Norway don't share a comparable Wealth Gini (like I said above, it's WEALTH Gini, not Income Gini). While absolute wealth inequality did grow in both NO and DE since 2008, SE's Wealth Concentration also at a much higher starting position than either NO and SE in 2008 2008 - 2019 DE 0.667 0.816 NO 0.663 0.798 SE 0.742 0.867 2008 - https://www.nber.org/papers/w15508 https://www.nber.org/papers/w15508 2019 - https://www.credit-suisse.com/media/assets/corporate/docs/about-us/research/publications/global-wealth-databook-2019.pdf https://www.credit-suisse.com/media/assets/corporate/docs/ab... And finally, roughly the same old money families/nobility that existed in Sweden c. 1700 continue to have a roughly similar impact in Sweden c. 2012 from a social mobility standpoint. https://faculty.econ.ucdavis.edu/faculty/gclark/papers/Sweden%202012%20AUG.pdf https://faculty.econ.ucdavis.edu/faculty/gclark/papers/Swede...
cannabis_sam 4y ago
It’s not complicated, housing is being used as an investment vehicle for narcissistic speculators to make bank, while clueless homeowner assholes are desperately clinging to their mortgages. This is a constant across the western world, and it’s not gonna change until middle class families end up living on the street. The sooner this psychotic, braindead and hateful housing market collapses, the better.
- cannabis_sam 4y ago
  I literally can’t believe this comment actually got upvotes; at least this restores some sliver of faith in humanity for me..
timonoko 4y ago
Only difference between Sweden and Finland is that Finland stopped all rent regulation in 1985. I was a landlord during that era, and after few years of turmoil, most rents started go down. Nowadays the rents are mostly costs + 40% -(32% capital gains tax) ie worse than most other investment. You only invest on housing because you expect home ownership raise on that area.
- lambic2 4y ago
  Isn't rental income treated as income tax? It is in the U.S. Since tax is on the profit only, the tax would be on that 40%, so 32% of 40% so ~10%. You are still walking away with 68% of 40%, so 30% of your rental income is profit.
  - timonoko 4y ago
    It is not. It is pure capital gains tax. Actually it is worse than that, because it can be difficult to prove what your true gains are. Loan costs for example are not easily tax-deductible, you must establish a firm for that. I gave up landlording altogether, because for many years it was not worth the hassle. Most areas in Helsinki it is more profitable to keep the apartment empty and wait for the rich Russian, who buys it at +50%. In this building third of the apartments are empty or short-time rentals of some sort.
IG_Semmelweiss 4y ago
the missing word in all these comments is inflation
cromulent 4y ago
Ten years ago the average mortgage length in Sweden was 140 years. It's been limited to 105 years now, and the length has reduced. It's hard to imagine a market like that can be anything but dysfunctional. https://www.thelocal.se/20160324/sweden-limits-mortgage-loans-to-105-years/ https://www.thelocal.se/20160324/sweden-limits-mortgage-loan...
alexitorg 4y ago
I wonder how much of it is secular. With populations weighted towards older workers demand for investment goods is high vs consumption goods where demand is low. As older workers are saving for retirement. As investment goods are not included in inflation measures like CPI. Low demand for consumption goods is causing low measures of inflation, causing central banks to keep rates low. While low interest rates and high demand for investment property is driving the value of dwellings up rapidly. I'd favour including property in CPI and increasing the deposit requirements...
pivic 4y ago
Sweden differs a lot in terms of both the cost of living arrangements and wealth compared with the rest of Europe. I've written about this: * https://pivic.blog/blog/the-swedish-cost-of-living-arrangements/ https://pivic.blog/blog/the-swedish-cost-of-living-arrangeme... * https://pivic.blog/blog/swedish-greed-seen-through-andreas-cervenkas-eyes/ https://pivic.blog/blog/swedish-greed-seen-through-andreas-c...
Roritharr 4y ago
At 35, the RE Bubble is the single thing that makes me have deep regrets about trying to be successful in startups for the past 15 years. I've made a small exit, but by that point interest rates were already rising and the amount for a down payment got so large that buying a house in a way that makes financial sense still is out of reach. Contrasting that with my friends who simply got a corporate job and bought something with next to no down payment and <2% interest rate, they are nearly done paying down their houses or are still in a low fixed rate payment scheme until they are done for another 7 years. They had their holidays, I had my 60-80hr "responsible for everything" weeks. I'm pretty sure I am not alone in this, judging by the amount of people I know in tech who adopted to become "digital nomads", living with their family in what I consider glorified trailerparks and home-schooling their kids.
hurril 4y ago
It's more todo with the interplay between a broken (regulated) rental system and a subsequent need for owning instead of renting. One idealogical group thinks that if we have artificially low prices on rental properties, then we can have access to cheap living when we need it. But what ends up happening is that people keep these contracts (often renting them out, second hand.) So the regulation actively hinders access to cheap for-rent apartments instead. This means that all of us have to buy instead of rent, causing a much higher demand in this market. And the second hand for rent market is also a lot more expensive than the regulated prices to boot. So no one can afford anything as a result. Without support from huge loans and/ or rich parents and/ or having bought and sold apartments, riding the wave up in prices. I personally entered late so had to save tons of money and in-debt myself to afford a place. All because one idealogical side has this misguided sense that this regulation somehow exists to help _me_. Me being someone that moved to an urban area for work. Now these same people somehow feel resentment in that I own something expensive that they don't, and that this provides me access to all this printed money. As if I'm not indebted up over my head just to have a decent place to live. It's really stupid.
blobbers 4y ago
The land is owned by the lords. The problem is the latest generation of wealthy lords has figured out how to stay wealthy. As their wealth grows, the plight of the common person grows as well. The wealthy haven't allowed themselves to become poorer, or even relatively poorer. They've only grown their riches. Because there is a lack of taxation on the rich, they tend to accumulate assets. They can then depreciate these assets while using their income for leverage. Ultimately every dollar the rich landlords collect is a tax on the poor. The very concept of ownership may seem a little bit unnatural. How can one person own the dirt someone stands on. How deep down do they own it? Is it a radial ownership of the earth?
acd 4y ago
It was zeeo interest rates policys by central banks who helped inflate this real eastate boom. Sweden has also had fixed prices on rental prices. This means that you need to queue very very long to get a rental contract. Combine price control on rental, "zero" interest rate policy by the central bank driving up home prices.
marsven_422 4y ago
[dead]
Cyberthal 4y ago
If there's not enough housing, just import immigrants to build more.
anotherhue 4y ago
The general form seems to be, if you were born after 1990, then you are entirely locked out of the asset class that drives wealth, which also happens to be a requirement for existence. Nothing changes because the governments are largely composed of people for whom this does not apply.
- bjornsing 4y ago
  > you are entirely locked out of the asset class that drives wealth No asset class can both “drive wealth” (in a predictable manner) and be available to all. Exclusivity is fundamental to privilege.
surfsvammel 4y ago
What? Is this really a problem in Sweden, or is it a problem in Stockholm? (Sure, I know some places like Lund has great inflow of high income earners, very little housing, driving prices, but that’s not the norm). Stockholm has even traditionally been relatively cheaper(relative to salaries) compared to other capitals of Europe.
anovikov 4y ago
There is no way to have affordable housing in a rich democracy, period. There are no exceptions to that. To have housing affordable, you need to either "fix" "rich" - then people will not have enough income left for housing after expenses for food, and there won't be a bidding war for properties, people's problem will be hunger - or you need to "fix" democracy, then people's desire to uphold their property values by limiting construction won't matter, and demand will be quickly and easily filled by developers by building millions of Soviet-style apartment blocks, collapsing prices. Nothing in this world is for free. Unaffordable housing is just one of the unavoidable costs of living in a democratic country.
0dayz 4y ago
I have to say I really appreciate the Japan model, where the real estate investment is looked at in two parts; the land and the building itself. Since while I'm no socialist / communist, I think they got a point with housing is a right in that the current system is way too volatile/destructive once the cards fall. The Japanese sought to make it less speculative, or at least make it have a deadline.
z3t4 4y ago
One major difference between the USA and Sweden is that if you have a bank loan and can't pay it back they will take all your assets, not only those you used for security! So you will be in dept for life! Another major difference is that education is free! And healthcare is almost free. In the last 15 years the Swedish population has increased nearly 20% mostly by immigration. Most of the immigrants are Muslims, and are not allowed to pay interest by their religion! Thus the weird housing market. In the last 10-15 years interest rates has dropped below zero. And property prices has gone up 5x. Those who didn't want to spend their money in the last 15 years (the baby boomers) now want to spend their money!
cudgy 4y ago
After paying $40k for a black market lease, “What was I supposed to do,” said the woman, who asked not to be identified, “live under a bridge or queue 15 years for an apartment?” Moving to another country is always an option. If the property market is truly this awful (10 year waiting lists for affordable housing), why is the population increasing? It doesn’t add up.
pyuser583 4y ago
Not too long ago Swedish mortgage rates were negative. What do you expect to happen?

229 points by SirLJ 4y ago

ftyers 4y ago

https://archive.ph/rLm7B https://archive.ph/rLm7B

oblio 4y ago

Paywall :-|

deleted 4y ago
[deleted]

sgt 4y ago

Sweden is broken? That's news to me. Why isn't this in the media?

ChuckNorris89 4y ago
>Why isn't this in the media? Not Swedish but I assume the ones who run the real estate interest groups are also hand in hand with those who own mainstream media so they have no interest to dig up dirt on them and will turn a blind eye. I assume Germans initially also asked themselves why isn't the Wirecard fraud in the local media and only reports on it come from the US. Influential people in a country tend to scratch each other's backs.
rejectfinite 4y ago
Housing is yea.
tpmx 4y ago
Young people are upset they can't live centrally in the capital for cheap. Same story as everywhere else. Now go forth with the ritual flogging, er, downvoting. (I live and work in the countryside of Sweden. I recommend it.)
- ChuckNorris89 4y ago
  Sure, but try dating and building social circles while living in rural areas as a single 20-30 something year old. Of course young people want to live in dense walkable areas where it's easy to find other like minded people. Isn't Swedish population also statistically one of the biggest sufferers of loneliness in the world and also one of the largest consumers of antidepressants? Or was that Finland? I'm not sure.
  - tpmx 4y ago
    There are plenty of more affordable, densely walkable city areas in Sweden. Every single city in the country is built this way, from the smallest to the largest. That's not the factor. The factor at play here is that these all these people want to have a cheap apartment in the same 10 km^2 that's designated as the cool place. When that can't happen because of physics, they claim society is breaking down. > Isn't Swedish population also statistically one of the biggest sufferers of loneliness in the world and also one of the largest consumers of antidepressants? No idea, but it sounds a bit like reverberations from Dwight D. Eisenhower's 1960 speech where he said that "sin, nudity, drunkenness and suicide" in Sweden were due to welfare policy excess, which then quite incorrectly caused americans to correlate Sweden with suicide and depression for many decades. At the moment the suicide rate is higher in the US than in Sweden but we're relatively similar in this statistic. https://ourworldindata.org/grapher/death-rate-from-suicides-ghe?tab=chart&country=SWE~USA https://ourworldindata.org/grapher/death-rate-from-suicides-...
    - tannhaeuser 4y ago
      > all these people want to have a cheap apartment in the same 10 km^2 that's designated as the cool place. Which, incidentally, is cool because not everyone's living there ;) Don't know about Stockholm, but I guess those places are the same 19th/early 20th century quarters like in every other European city build for renting out to an upward moving middle class and popular exactly because they're meeting the representative needs of their tenants then and now.
maximilianroos 4y ago
> Why isn't this in the media? Like on bloomberg.com?
imwithstoopid 4y ago
[flagged]
smnrchrds 4y ago
https://www.butajape.com/comic/why-wont-they-cover-this/ https://www.butajape.com/comic/why-wont-they-cover-this/
refurb 4y ago
The bigger questions for you should be - "what else is the media not covering" and "why is the media covering what they do"? Think hard about those questions next time you read a news article.
refurb 4y ago
Did you know about the 100+ grenade attacks in Sweden over a period of 6 years? https://en.wikipedia.org/wiki/List_of_grenade_attacks_in_Sweden https://en.wikipedia.org/wiki/List_of_grenade_attacks_in_Swe...
mclightning 4y ago
There is definitely some opinion-making happening by news agencies, to crash the housing market.

ChuckNorris89 4y ago

Real estate can either be a lucrative investment or it can be affordable. Why are people continuously acting shocked when they realize it can't be both? And why are elected politicians everywhere continuously shrugging their shoulders as if the housing market is somethin completely outside of their control.

pessimizer 4y ago
> And why are elected politicians everywhere continuously shrugging their shoulders as if the housing market is somethin completely outside of their control. This isn't what's happening. Any politician that promised to lower house prices would be demolished by middle class people who a) think that additional wealth from rising house prices is their just reward for being wealthy enough to own a house, and b) will be in deep shit on their mortgage if house prices go down, because mortgages are just highly leveraged investments. edit: whenever house prices seem like they might go down, governments inject huge amounts of tax money into the housing market. The people that tell us in the US that cancelling student debt is a subsidy to the rich will never fail to send direct subsidy to homeowners and prospective homeowners. In that way, government interventions into the housing market only happen as a bubble is popping, and their intention is to maintain bubble pricing.
havblue 4y ago
It's funny that it was sold as "affordability". Is it really more affordable to have a mortgage that lasts twice as long? Can we really consider interest only to be home ownership? You don't own that home, the banks do, Maverick!
- brabel 4y ago
  If you invest your money on anything that gives , say, 5% yearly returns on your money, instead of paying off your mortgage, which used to be at less than 2% (but is not getting beyone 4%), you're just better off. Say you start with a 10,000 mortgage, and your payment per year is 500, not including interest. By the end of the year, you'll have a 9,500 mortgage left. If you just invested the 500 and only paid interest on the mortgage (which was common in Sweden until a few years ago), you'll still have a 10,000 mortgage, but you have 525 in your pocket. You could now go and pay off some mortgage, resulting in you having now only 9,475 left (i.e. you're better off)... but why would you do that? Just keep investing that money!

nivenkos 4y ago

The main problem is the terrible rent control system - with a lucky few getting rent-controlled first-hand contracts, and everyone else facing a cut-throat almost completely unregulated market of sub-letting. Rent control never works.

ChuckNorris89 4y ago
Of course it doesn't. The only way to bring down prices is to build more supply than the demand, but for some reason this elephant in the room is always ignored because always a million reasons come up against it, mostly being just NIMBYsm in disguise. Keeping a limited supply artificially price capped through regulations, sounds good at first, and will most likely be popular with clueless voters, but it will lead to shortages down the road and only the lucky few with money or connections will be able to afford. We had that in communism, except ironically, not with housing but with food and goods. Now the west has the opposite problem, everyone has plenty of food and iPhones, but no housing. Have Swedes never learned about this and the functioning of supply/demand in their excellent school system?
- varispeed 4y ago
  > but for some reason that route is never explored. The reason you are looking for is called corruption. There is a very strong lobby of landlords and the rich treating residential housing as a store of value. It offers better returns than keeping money in the bank and it is safer, especially if you are from a country where your assets could be in danger - it's much harder for foreign states to take control of the property, sell it and recover the monies. Here in the UK we have the same problem. Good percentage of the ruling party (and opposition) are landlords, there is a ton of foreign money coming in buying up properties left and right and they don't even care if they are rented out, because empty property gives good enough return. We even have banks start to move in this business as well. It has gone completely mad. But since big money is all over it and our security services are not interested in looking into it, nothing is going to change it will only get worse.
  - joshuaissac 4y ago

timkam 4y ago

A key problem in Sweden -- besides the weird interaction of privatization and legacy over-regulation -- is that the current inflation and rising interest rates break the social contract: a relatively even salary distribution allowed many people to have a solid middle-class life style, recently albeit with never-ending mortgages. Now, the interest rates are too high for these mortgages to be even superficially sustainable, people have less money at hand to pay for them, and there is no political will to relief the working and middle class, which means many will slide down the social ladder. As an immigrant living in Sweden I fear that the country will soon be pretty unattractive to live in for most 'internationals' who have a choice.

moltar 4y ago
I think you could say exactly the same story about Canada. And imagine many other countries soon. Interest rates will spoil the party.
- brailsafe 4y ago
  Canada is fucked
- f1shy 4y ago
  And Germany, ans so many other countries
- theshrike79 4y ago
  The difference in Sweden is that they gave out ridiculously long loans for housing. Like 60-100 years. The kind that was never meant to be paid back.
jokethrowaway 4y ago
It's the same everywhere, not only in Sweden. What a surprise. The government got your taxes AND screwed you with inflation over time. Then COVID happened and they had to print more, postponing and aggravating the crisis. Now it's time to pay and nobody will take the blame. When are people going to rebel?

belorn 4y ago

It should not be a major surprise that the gap between the haves and the have-nots will widen if you have a large compareable influx of have-nots, or to speak more precisely, an influx of new citizens with low social-economic status compared to those who already were ctiziens. In a very dispassionate perspective, it is just plain math. It is going to take time to return back to the same levels as before.

FpUser 4y ago
>"It is going to take time to return back to the same levels as before." Growing divide is universal and pending some tectonic changes in the way our society operates there is no coming back.
- xdennis 4y ago
  > tectonic changes in the way our society operates AI and/or climate change. It may fuck up the planet but at least I'm going to enjoy the housed suffering too.
ChuckNorris89 4y ago
>if you have a large compareable influx of have-nots I'm not in Sweden but why are we always pointing the finger at the poor immigrants? Do you think there are no native Swedes being fucked by this real estate market? Granted, having an open borders migration policy is not a good idea when you have a housing shortage. If you're struggling to provide for the locals, then the newcomers will have it even worse and won't like it, leading to more inequality, social divide, unrest and increased crime. But blaming immigrants is always a cheap shot politicians take to blame the demographic without voting rights for the problems they themselves are responsible for. "It's not us who screwed you over with inflation and housing while taking your taxes, it's the immigrants who took your job and house".
- bilbo0s 4y ago
  So true. Immigration is an entirely separate issue. Conflating it with the fact that hard working Swedes can’t secure good housing only serves to make those Swedes, who are already pissed off, more pissed off. It’s bringing the masses closer to taking to the streets with calls for Madame La Guillotine. Housing needs to be fixed asap in Sweden. (And in most of the western world if we’re being honest.)

patall 4y ago

Not sure about the main story about the article. However, construction on that Ursvik/Rinkby construction site has been very slow since long before the current crisis. I was biking through the neighboring bridge of the one mentioned here (that is about 100m down the road, so much about that new bridge alone enabling crime) for about 8 month and while my way through changed a few times, progress was very slow. (Not that any of the many many construction projects in Stockholm has been fast). What the article misses is that the Swedish Krona has lost more than 10% compared to the Euro over the last year and that, while theoretically making exports more valuable, increase inflation for all import products. Which for me as an immigrant is the main economic flaw in this country: it should have adopted the Euro like Finnland or at least locked the exchange rate like Denmark. But no, false national pride has now made the entire economic down-turn even harder. (One should also note that mortage rate here in Sweden are still surprisingly low. My 3 month fixed rate right now is 3.65% of which I get back 30% via taxes. Hence I am effectivly borrowing at 2.5%)

nickez 4y ago
The SEK used to be locked. That lead to another kind of crisis in the nineties. You are right that we should've adopted the euro though.
- bombolo 4y ago
  "They have all these useless little coins!!" Said the swedes back then apparently completely forgetting about the 50 öre coins and the gigantic 5sek coins.
chrisco255 4y ago
The Euro is also doomed. It might have saved Sweden a few months of pain at most.
cjblomqvist 4y ago
> But no, false national pride has now made the entire economic down-turn even harder. Or it's more nuanced than that and there are actual benefits (as well as downsides) to having your own currency. It's like Covid. When it went well everybody was cheering and saying how we Swedes were geniuses. When it flipped, we were suckers. Maybe, it's more complex and actually quite a lot about luck and other factors. Another example. Few have historically thought ill of Sweden's long (now gone) tradition of being neutral. One thing that makes it very difficult to be neutral is having a currency that you only control a few percent of.

twodave 4y ago

Interesting undercurrent that the article presents: a Sweden with high immigration has a lot of the same problems as the United States. Maybe living in a utopia is only possible if you first ship away those pesky poor folks. /s

rhaway84773 4y ago

The Sweden story sounds so much like the SF story. Area doesn’t building housing, leading to a massive increase in house prices and a destruction of class mobility as the rich get richer (as their houses get more valuable) and the poor get poorer (as they pay more to rent the same living space). The growing wealth inequality leads to all sorts of other dysfunction including increased crime, worsening services, etc. as the govt cannot raise enough taxes. And finally, instead of solving the fundamental expensive housing problem, opportunists will blame the other. More often than not the other are the victims of the problems. Immigrants in Sweden’s case, and since one can’t blame immigrants for obvious reasons in SF, homeless people in SF.

deleted 4y ago
[deleted]
bequanna 4y ago
> The growing wealth inequality leads to all sorts of other dysfunction including increased crime, worsening services, etc. as the govt cannot raise enough taxes. Hold up. I don’t think the people of San Francisco grew weary of increasing rents and decided to turn to a life of crime. Most of the “trouble makers” in the Bay Area are recent arrivals to the area and come because of poor policing and the government is generally more tolerant of them.
- deleted 4y ago
  [deleted]
- tptacek 4y ago
  This is debunked every time it's brought up. The "trouble makers" you're referring to are local. It is not in fact the case that San Francisco mass-imports its downtrodden.
  - Entinel 4y ago
    Debunked with what data?
  - 4y ago

boringuser2 4y ago

Nobody likes to talk about the effect of moving large populations around globally without the housing infrastructure to support them.

DevKoala 4y ago
Seriously. I feel people act naively on these discussions because they are afraid of offending others, but it is common sense that a ~0.3%/year influx of immigrants with low resources over 50 years has contributed in some way to economic disparity in Sweden. Nobody is saying that immigrants are having a negative effect here, it just means that newcomers have an uphill battle versus established families that have been building wealth for decades.
- boringuser2 4y ago
  Just to clarify your point, it means that the opportunity for people who were the offspring of "historic" Swedish citizens and didn't not already own or inherit substantial wealth (most people) was subtracted due to the large movements of populations. As a result, I don't see why someone would support such a policy.
Ekaros 4y ago
Also not to forget globalization moving populations inside countries. Which might be key effect. Globalization caused many industries to die off and basically those communities now have housing stock that is worth very little or is worthless. As the jobs stopped being there and new jobs have been created in other places which do not have the supply of new housing.

brailsafe 4y ago

Can't read the article but I bet it's familiar to any Vancouverite

jdmoreira 4y ago

I'm in the highest percentiles of income in Sweden (public data is available) and it doesn't matter. It's basically impossible for me to afford a house / apartment for my family in the best neighborhoods. What's the point? What is the point of trying to be a high performer if wealth can't be acquired by income? Why would I want to work for anyone in this country? Only way out is equity and that game is even harder to play in Sweden than in the US.

brailsafe 4y ago
I'm in Vancouver working remotely for an EU/US company because I couldn't get anything here. At $100k CAD, my partner and I wouldn't be able to afford a modest upgrade to a 1 bedroom condo... anywhere in the city (from a tiny basement studio) without significantly increasing our take home. The place I just visited would require $4000/m after a 20% down payment (which I don't have). If I double my savings in the next year, assuming I don't get laid off next week and go broke again, I'd have enough for a 5-10% down payment and hypothetically require mortgage insurance, plus still not be able to afford the mortgage. But hey, at least the cops won't arrest me for openly smoking crack on the sidewalk, so that'll help me deal with the stress of trying to be a high performer.
- jmspring 4y ago
  Back in the mid/late 90s Vancouver was affordable and a lot of flats being built. It was still more expensive that the suburbs, etc. but still cheaper than metros across the border. Sometime in the 2000s money started flowing in and those flats I was seeing in place like Kits for $150-$200k were suddenly going up a lot. Rents were also escalating. A lot seemed to be fueled by foreign money. I was looking at relocating at the time and wish I had followed through.
  - brailsafe 4y ago
    Ya that seems to be part of consensus, and consistent with what I'm seeing in terms of when some places were built. The suburbs around Vancouver gradually decrease in price a bit, but for obvious reasons and not enough to make much of a difference. It's like going from $750k for a 1 bedroom to $550k for a 1 bedroom and that's sort of the spread within reason; an absurd gap to be sure I don't mind them, but I'm just thinking about it terms of being able to stay in my community for once.

watrami 4y ago

It seems like it's the same story everywhere I look. Housing is the main driver of inequality and there is little change happening. We have the same problem here in Germany. I am currently living in Munich to finish my CS Master's at TUM and build a startup, and it is absolutely impossible to find anything remotely affordable. I am supported by two startup scholarships and make enough to get by, but no landlord even gives me the chance in the first place after they see my income and plans. Right now I am paying 940€ for ~20sqm, and only because my mom co-signed my contract - which is incredibly humiliating as a 24 year old guy. And even with high-paying jobs it's impossible to get anything remotely affordable. My girlfriend just finished her degree and makes 75k straight out of college and still gets rejected either for her financial situation or because the rental contract is already set to increase 8% each year - which we simply cannot afford. And it's not just Munich. Every city in Germany has this problem. How the hell are we ever supposed to build up some savings, settle down and have a comfortable life? It really feels like being born 15 years too late for this. Germany paid a lot for our education but offers us little reason to stay. We are already looking to move to other places and created a university-wide google sheet where we compare different countries and cities around the world for those kinds of categories. Sorry for the rant.

maxFlow 4y ago
> We are already looking to move to other places and created a university-wide google sheet where we compare different countries and cities around the world for those kinds of categories. Could you share a few places at the top of your list? As you yourself pointed out, it looks like the same story is playing out everywhere one looks, especially in the West. Given the current situation, the more I think about it, the more I conclude that going fully remote from a low-COL location may be the better answer. Unfortunately I think this complicates things for founders to raise. Also, this makes me think how utterly unprepared Germany is to receive all those immigrants needed to keep the economy working. Best of luck with your plans.
G3rn0ti 4y ago
> And it's not just Munich. Every city in Germany has this problem. Well, rising cost of living is a reality everywhere (it’s called inflation). But Munich is really extreme. You might want to consider moving to Eastern Germany. If you pursue an academic career, you might want to watch for positions in Magdeburg, Greifswald or Leipzig. > How the hell are we ever supposed to build up some savings ETFs (exchange traded funds i.e. index funds) give you better yield than just paying into a savings account. You also might want to invest some percent in more risky positions like BTC and ETH (10%) bc now is a good time to do that. Also give it a couple of more months. Housing price increases are already decelerating and start to decline in some areas. The last 10 years were exceptional in low interest rates and money printing in the EUR zone. If you can avoid it, don’t own a car — it’s always a money drain. :)

jamesgill 4y ago

I don't think this is a housing/real estate story as much as it is a story of immigration impacts. Rinkeby has about 20k residents--and ~90% of them are immigrants (1st or second generation). Nearly all of those arrived in utter poverty, and arrived in a relatively short period of time. Understandably, large amounts of immigration is coupled with extreme poverty and escalation of crime, rioting, etc. But there are additional implications of terrorist cell links, and more. It's a complex story.

medion 4y ago

The answer is very simple - more construction - and to do so, we need deregulation, density, training and innovation.

adverbly 4y ago
> more construction - and to do so, we need deregulation, density, training and innovation. Doesn't even need to be that complex: land value tax would do it(and solve many other issues as economists have been saying for decades). Land scarcity shifts late-stage market incentives away from building to rent seeking and speculation. LVT would fix these incentives. It is badly needed in most first world countries at this point.

EnglishmanITGuy 4y ago

[flagged]

INTPenis 4y ago
As an indigenous Swede with sleeping problems I find it amusing that these posts and discussions about Sweden are happening when the time is 03:20 here, we're all asleep and can't even defend ourselves. :D

alephnerd 4y ago

Surprised no one on here mentioned estate taxes - Sweden repealed estate taxes in 2005 [0], and as such Sweden has one of the highest wealth (not income) Ginis in the world [1]. Other notable developed countries in the top of the wealth list are Netherlands (€1.3mil exemption from inheritance tax if planned correctly [2]) and the US (no inheritance tax below $12mil [3]). In essence, you are allowing the top 10% to gobble up all the value from the rest of society, and allowing old money to continue perpetuating itself. [0] - https://taxsummaries.pwc.com/sweden/individual/other-taxes https://taxsummaries.pwc.com/sweden/individual/other-taxes [1] - https://www.credit-suisse.com/media/assets/corporate/docs/about-us/research/publications/global-wealth-databook-2019.pdf https://www.credit-suisse.com/media/assets/corporate/docs/ab... [2] - https://practiceguides.chambers.com/practice-guides/private-wealth-2022/netherlands/trends-and-developments https://practiceguides.chambers.com/practice-guides/private-... [3] - https://www.investopedia.com/estate-tax-exemption-2021-definition-5114715 https://www.investopedia.com/estate-tax-exemption-2021-defin...

ctroein89 4y ago
Sweden abolished inheritance taxes because the cost of enforcing the tax was greater than the taxes raised, and was passed by a left-wing coalition. At the time, it was considered a success of social democracy to not need inheritance taxes (and in fact, everyone, including the law, referred to dödsskatten - the death tax). 20 years isn’t ready enough time for wealth to consolidate like that via inheritance alone, and similar countries (like Norway and Germany) are seeing similarly rapid raises in their Gini Indexes for wealth, without chances to their inheritance tax systems. Something is broken in Western economies, but unfortunately, inheritance taxes in Sweden aren’t the problem.
- alephnerd 4y ago
  "The question we set out to answer in this study is how the Swedish personal wealth distribution has evolved since 2007. This year, a right-wing party alliance was elected after a long period of Social Democratic rule and among its first reforms was to repeal the wealth tax ... Our main result concerning wealth inequality in Sweden is that it appears to have increased since 2007. The recorded rise in the Gini coefficient and top wealth shares is about ten percent" https://onlinelibrary.wiley.com/doi/abs/10.1111/roiw.12294 https://onlinelibrary.wiley.com/doi/abs/10.1111/roiw.12294 Note that the study above only analyzed wealth in Sweden over the time period of 2007 (when the wealth tax was repealed, not 2005 as I erroneously wrote in my earlier comment) and 2012. Germany and Norway don't share a comparable Wealth Gini (like I said above, it's WEALTH Gini, not Income Gini). While absolute wealth inequality did grow in both NO and DE since 2008, SE's Wealth Concentration also at a much higher starting position than either NO and SE in 2008 2008 - 2019 DE 0.667 0.816 NO 0.663 0.798 SE 0.742 0.867 2008 - https://www.nber.org/papers/w15508 https://www.nber.org/papers/w15508 2019 - https://www.credit-suisse.com/media/assets/corporate/docs/about-us/research/publications/global-wealth-databook-2019.pdf https://www.credit-suisse.com/media/assets/corporate/docs/ab... And finally, roughly the same old money families/nobility that existed in Sweden c. 1700 continue to have a roughly similar impact in Sweden c. 2012 from a social mobility standpoint. https://faculty.econ.ucdavis.edu/faculty/gclark/papers/Sweden%202012%20AUG.pdf https://faculty.econ.ucdavis.edu/faculty/gclark/papers/Swede...

cannabis_sam 4y ago

It’s not complicated, housing is being used as an investment vehicle for narcissistic speculators to make bank, while clueless homeowner assholes are desperately clinging to their mortgages. This is a constant across the western world, and it’s not gonna change until middle class families end up living on the street. The sooner this psychotic, braindead and hateful housing market collapses, the better.

cannabis_sam 4y ago
I literally can’t believe this comment actually got upvotes; at least this restores some sliver of faith in humanity for me..

timonoko 4y ago

Only difference between Sweden and Finland is that Finland stopped all rent regulation in 1985. I was a landlord during that era, and after few years of turmoil, most rents started go down. Nowadays the rents are mostly costs + 40% -(32% capital gains tax) ie worse than most other investment. You only invest on housing because you expect home ownership raise on that area.

lambic2 4y ago
Isn't rental income treated as income tax? It is in the U.S. Since tax is on the profit only, the tax would be on that 40%, so 32% of 40% so ~10%. You are still walking away with 68% of 40%, so 30% of your rental income is profit.
- timonoko 4y ago
  It is not. It is pure capital gains tax. Actually it is worse than that, because it can be difficult to prove what your true gains are. Loan costs for example are not easily tax-deductible, you must establish a firm for that. I gave up landlording altogether, because for many years it was not worth the hassle. Most areas in Helsinki it is more profitable to keep the apartment empty and wait for the rich Russian, who buys it at +50%. In this building third of the apartments are empty or short-time rentals of some sort.

IG_Semmelweiss 4y ago

the missing word in all these comments is inflation

cromulent 4y ago

Ten years ago the average mortgage length in Sweden was 140 years. It's been limited to 105 years now, and the length has reduced. It's hard to imagine a market like that can be anything but dysfunctional. https://www.thelocal.se/20160324/sweden-limits-mortgage-loans-to-105-years/ https://www.thelocal.se/20160324/sweden-limits-mortgage-loan...

alexitorg 4y ago

I wonder how much of it is secular. With populations weighted towards older workers demand for investment goods is high vs consumption goods where demand is low. As older workers are saving for retirement. As investment goods are not included in inflation measures like CPI. Low demand for consumption goods is causing low measures of inflation, causing central banks to keep rates low. While low interest rates and high demand for investment property is driving the value of dwellings up rapidly. I'd favour including property in CPI and increasing the deposit requirements...

pivic 4y ago

Sweden differs a lot in terms of both the cost of living arrangements and wealth compared with the rest of Europe. I've written about this: * https://pivic.blog/blog/the-swedish-cost-of-living-arrangements/ https://pivic.blog/blog/the-swedish-cost-of-living-arrangeme... * https://pivic.blog/blog/swedish-greed-seen-through-andreas-cervenkas-eyes/ https://pivic.blog/blog/swedish-greed-seen-through-andreas-c...

Roritharr 4y ago

At 35, the RE Bubble is the single thing that makes me have deep regrets about trying to be successful in startups for the past 15 years. I've made a small exit, but by that point interest rates were already rising and the amount for a down payment got so large that buying a house in a way that makes financial sense still is out of reach. Contrasting that with my friends who simply got a corporate job and bought something with next to no down payment and <2% interest rate, they are nearly done paying down their houses or are still in a low fixed rate payment scheme until they are done for another 7 years. They had their holidays, I had my 60-80hr "responsible for everything" weeks. I'm pretty sure I am not alone in this, judging by the amount of people I know in tech who adopted to become "digital nomads", living with their family in what I consider glorified trailerparks and home-schooling their kids.

hurril 4y ago

It's more todo with the interplay between a broken (regulated) rental system and a subsequent need for owning instead of renting. One idealogical group thinks that if we have artificially low prices on rental properties, then we can have access to cheap living when we need it. But what ends up happening is that people keep these contracts (often renting them out, second hand.) So the regulation actively hinders access to cheap for-rent apartments instead. This means that all of us have to buy instead of rent, causing a much higher demand in this market. And the second hand for rent market is also a lot more expensive than the regulated prices to boot. So no one can afford anything as a result. Without support from huge loans and/ or rich parents and/ or having bought and sold apartments, riding the wave up in prices. I personally entered late so had to save tons of money and in-debt myself to afford a place. All because one idealogical side has this misguided sense that this regulation somehow exists to help _me_. Me being someone that moved to an urban area for work. Now these same people somehow feel resentment in that I own something expensive that they don't, and that this provides me access to all this printed money. As if I'm not indebted up over my head just to have a decent place to live. It's really stupid.

blobbers 4y ago

The land is owned by the lords. The problem is the latest generation of wealthy lords has figured out how to stay wealthy. As their wealth grows, the plight of the common person grows as well. The wealthy haven't allowed themselves to become poorer, or even relatively poorer. They've only grown their riches. Because there is a lack of taxation on the rich, they tend to accumulate assets. They can then depreciate these assets while using their income for leverage. Ultimately every dollar the rich landlords collect is a tax on the poor. The very concept of ownership may seem a little bit unnatural. How can one person own the dirt someone stands on. How deep down do they own it? Is it a radial ownership of the earth?

acd 4y ago

It was zeeo interest rates policys by central banks who helped inflate this real eastate boom. Sweden has also had fixed prices on rental prices. This means that you need to queue very very long to get a rental contract. Combine price control on rental, "zero" interest rate policy by the central bank driving up home prices.

marsven_422 4y ago

[dead]

Cyberthal 4y ago

If there's not enough housing, just import immigrants to build more.

anotherhue 4y ago

The general form seems to be, if you were born after 1990, then you are entirely locked out of the asset class that drives wealth, which also happens to be a requirement for existence. Nothing changes because the governments are largely composed of people for whom this does not apply.

bjornsing 4y ago
> you are entirely locked out of the asset class that drives wealth No asset class can both “drive wealth” (in a predictable manner) and be available to all. Exclusivity is fundamental to privilege.

surfsvammel 4y ago

What? Is this really a problem in Sweden, or is it a problem in Stockholm? (Sure, I know some places like Lund has great inflow of high income earners, very little housing, driving prices, but that’s not the norm). Stockholm has even traditionally been relatively cheaper(relative to salaries) compared to other capitals of Europe.

anovikov 4y ago

There is no way to have affordable housing in a rich democracy, period. There are no exceptions to that. To have housing affordable, you need to either "fix" "rich" - then people will not have enough income left for housing after expenses for food, and there won't be a bidding war for properties, people's problem will be hunger - or you need to "fix" democracy, then people's desire to uphold their property values by limiting construction won't matter, and demand will be quickly and easily filled by developers by building millions of Soviet-style apartment blocks, collapsing prices. Nothing in this world is for free. Unaffordable housing is just one of the unavoidable costs of living in a democratic country.

0dayz 4y ago

I have to say I really appreciate the Japan model, where the real estate investment is looked at in two parts; the land and the building itself. Since while I'm no socialist / communist, I think they got a point with housing is a right in that the current system is way too volatile/destructive once the cards fall. The Japanese sought to make it less speculative, or at least make it have a deadline.

z3t4 4y ago

One major difference between the USA and Sweden is that if you have a bank loan and can't pay it back they will take all your assets, not only those you used for security! So you will be in dept for life! Another major difference is that education is free! And healthcare is almost free. In the last 15 years the Swedish population has increased nearly 20% mostly by immigration. Most of the immigrants are Muslims, and are not allowed to pay interest by their religion! Thus the weird housing market. In the last 10-15 years interest rates has dropped below zero. And property prices has gone up 5x. Those who didn't want to spend their money in the last 15 years (the baby boomers) now want to spend their money!

cudgy 4y ago

After paying $40k for a black market lease, “What was I supposed to do,” said the woman, who asked not to be identified, “live under a bridge or queue 15 years for an apartment?” Moving to another country is always an option. If the property market is truly this awful (10 year waiting lists for affordable housing), why is the population increasing? It doesn’t add up.

pyuser583 4y ago

Not too long ago Swedish mortgage rates were negative. What do you expect to happen?