Increasing home construction and easing regulations will be the best way to cool Sweden’s rapid household credit growth as the government seeks to maintain an economic expansion, the nation’s prime minister said.
“We’re following very carefully the development of debt,” Prime Minister Stefan Loefven said after a speech in Stockholm. “The best medicine against this is making sure we have enough housing because it’s when we have a housing shortage that prices take off.”
The government has already pledged about an extra 6 billion kronor ($700 million) to increase home construction in an effort to cool the housing market. Home and apartment prices are rising more than 10 percent on an annual basis, helped by an economic recovery and record low interest rates.
The government is also working on a law that will be ready next year to force more homeowners to pay down their mortgages faster.
Loefven said the legislation will take heed not to damage the economy or hurt families that are highly indebted as it crafts its new legislation.
“It needs to be done in a balanced way and carefully but it needs to be clear what the direction is,” he said.