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Riksbank Calls For Structural Reforms In Housing Market

Sweden's central bank said structural reforms are needed in the housing market to curb households' high indebtedness.

In the Financial Stability Report, released Wednesday, Riksbank said high household indebtedness poses the greatest risk to the Swedish economy.

The development of household indebtedness has gone hand-in-hand with housing prices.
To address the fundamental causes of high indebtedness, it is urgent that measures be taken in housing and tax policy, the bank said.

Riksbank said reforms proposed by the government should be carried out promptly and new measures needed to be developed.

If housing and tax policy measures are not implemented to the extent necessary and debts again start to increase at a faster rate, further macroprudential policy measures may become necessary.

Households are sensitive to changes that affect their finances, such as rising interest rates. The central bank has kept its repo rate at -0.25 percent in April. The repo rate was last hiked in December in an unexpected move, the first raise since July 2011.

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