STOCKHOLM May 22 Persistent house price growth
in Sweden from already over-valued levels, coupled with a
continued rise in household debt poses risks of a disorderly
housing market correction, the EU Commission said on Monday.
In its yearly review of the Swedish economy, the EU
Commission said wariness of mounting risks among the Swedish
authorities is high, but policy steps implemented has so far not
"Overall, policy gaps remain in the area of housing-related
taxation, the macroprudential framework, and in addressing
bottlenecks for new housing supply as well as barriers to
efficient usage of the existing housing stock," the Commission
The Commission recommends the Nordic country to gradually
limit the tax deductibility of mortgage interest payments.
Swedish house prices have sky-rocketed over the last two
decades, fuelled by lower interest rates, generous tax breaks
and low levels of building. Both the financial watchdog and the
central bank has long flagged that the surge is unsustainable.
(Reporting by Johan Sennero; Editing by Daniel Dickson)