Tax code driving Swedish runaway housing prices

[STOCKHOLM] Sweden's state-backed housing agency says the current tax code is driving prices well beyond what is sustainable.

After the government rejected proposals to scale back tax deductions on mortgage payments, the National Board of Housing, Building and Planning is calling for other measures to cool the property market. It's now urging politicians to drop a 22 per cent capital gains tax on housing which, the agency said on May 6, has kept the market "boiling" under a shortage of supply.

While record house price gains have made a lot of Swedes rich, many are reluctant to move because they don't want to pay the gains tax. The housing board says that's distorting property prices and often keeping Swedes in accommodation that's unsuited to their needs. Apartment prices nationwide have almost tripled since early last decade, and homeowners have amassed a record level of debt to pay for their properties, central bank data shows.