In a historical view, house prices have developed at the same rate as inflation. In the end of the 20th century the prices on the housing market started to differ from the inflation rate, and today the deviation is strong and the real price increase has been very strong.
The financial crisis in 2008, which was a result of a subprime mortgage crisis on the American real estate market, has made several agents on the housing market in Sweden question today’s prices. Robert Schiller, an American economist who predicted the mortgage crisis in 2008, claimed during the Nobel Prize ceremony 2013, that Sweden shows signs of a financial bubble – "I think that people here in Sweden have an illusion that increasing prices is a lasting trend, but that is more suggestive of a bubble".
Sweden has been in a recession for the last years, which has led to low interest rates and beneficial conditions on the real estate market. Despite the high unemployment and the recession, prices on the housing market in Stockholm County have continued to increase.
This bachelor thesis aims to analyze the housing market in Stockholm County and investigate if there is a price bubble or not, or if the high prices can be explained by fundamental factors.
The Thesis suggests that there is no price bubble on the housing market in Stockholm County. The increasing prices are based on fundamental factors, such as low interest rate,
low supply on the housing market in combination with an increasing demand. Therefore it is unlikely that there is no existing pricing bubble on the housing market in Stockholm County.
2015. , 52 p.