ESRB recommendation to Sweden for vulnerabilities in the residential real estate sector

The European Systemic Risk Board (ESRB) has issued warnings to five EEA countries and recommendations to six EU countries for medium-term vulnerabilities in their respective residential real estate sectors. Sweden is one of the countries that receives a recommendation. The recommendation suggests appropriate actions to address the identified vulnerabilities. In 2016, the ESRB issued a warning to Sweden regarding risks in the residential real estate sector.

The ESRB acknowledges that the macroprudential measures introduced by the Swedish authorities since 2016 are appropriate, with respect to the identified vulnerabilities in the residential real estate sector. Nevertheless, the ESRB concludes that these measures are only partially sufficient to address these vulnerabilities. The ESRB therefore recommends Sweden to review its policies with the aim of curbing the structural factors that have driven the vulnerabilities identified in Sweden. The ESRB also recommends the Swedish national authorities to monitor the vulnerabilities and stand ready to implement or tighten already existing macroprudential measures should the risks increase.

"We welcome the ESRB's recommendation to Sweden. It emphasises the importance of addressing the underlying structural factors that have caused the build-up of vulnerabilities in the residential real estate market. These are issues that also other international institutions, such as the International Monetary Fund and the EU Commission, have pointed to. While the ESRB acknowledges that national macroprudential measures have so far been appropriate, vulnerabilities remain and the situation needs to be carefully monitored" says Governor of the Riksbank Stefan Ingves and Director General at Finansinspektionen Erik Thedéen.

Sweden is expected to deliver reports on the implementation of the recommendation to the ESRB.

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