The Impact of Swedish Amortization Requirements on Housing Prices in the Gustav Vasa Area, Stockholm

Sammanfattning

This study examines the effects of the Swedish amortization requirements, which were introducedin 2016 and 2018 respectively, on housing prices in the Gustav Vasa area in Stockholm, throughmultiple linear regression analysis. The data set spans the period 2010-2020. The models createdduring the study estimate the effect of the amortization requirements from 2016 and 2018 on thecontract price, while controlling for property-specific characteristics, such as living area, number ofrooms, year of construction, relative apartment floor, new construction and macroeconomicindicators, including mortgage rates, Gross Domestic Product (GDP), inflation and stock marketprices. The final model had an adjusted R^2 value of 72.0% and indicates that the introduction of thetightened amortization requirement in 2018 had a statistically significant negative impact onhousing prices in the Gustav Vasa area. After controlling for other factors, prices were on averageapproximately 9.1% lower after the introduction of the stricter amortization requirement in 2018.However, no statistically significant independent effect could be found for the introduction of theamortization requirement in 2016 in the final model. The results provided quantitative evidencethat the stricter amortization requirement contributed to a cooling effect on the housing market inthis specific area in Stockholm, which provides valuable insights for the continued macroprudentialpolicy debate.