dec - 93 jun - 92 dec - 92 jun - 91 dec - 91 dec - 90 - 20 profit before loan losses profit before loan losses using ifrs loan losses sources : bank reports and the riksbank 2. real prices for office premises in central locations ( index 1981 = 100 ) stockholm goteborg c05 de c - de c04 cde de c01 c00 de de c99 de cde de c - cde c95 c94 de de c93 de cde de c - c89 cde c88 de de c87 c - de c - de de c84 de c83 de c81 de de c82 malmo sources : newsec ab and the riksbank 3. house prices ( index 1986 = 100 ) national average greater stockholm greater goteborg greater malmo m ar - 0 m ar - 0 m ar - 0 m ar - 0 m ar - 0 m ar - 0 m ar - 0 m ar - 9 m ar - 9 m ar - 9 m ar - 9 m ar - 9 m ar - 9 m ar - 9 m ar - 9 m ar - 9 m ar - 9 m ar - 8 m ar - 8 m ar - 8 m ar - 8 source : statistics sweden 4. dwellings completed in newly constructed buildings ( units ) source : statistics sweden 5. ratios of household debt and post - tax interest expenditure to disposable income ( per cent ) debt ratio ( lhs ) mar - 06 mar - 05 mar - 04 mar - 03 mar - 02 mar - 01 mar - 00 mar - 99 mar - 98 mar - 97 mar - 96 mar - 95 mar - 94 mar - 93 mar - 92 mar - 91 mar - 90 mar - 89 mar - 88 mar - 87 mar - 86 mar - 85 mar - 84 mar - 83 mar - 82 mar - 81 mar - 80 mar - 79 mar - 78 mar - 77 mar - 76 mar - 75 mar - 74 mar - 73 mar - 72 mar - 71 mar - 70 interest ratio ( rhs ) sources : statistics sweden and the riksbank

markets for commercial property in stockholm, goteborg and malmo, as office premises in these metropolitan areas are predominant in the swedish property companies ’ property stocks. in recent years, turnover of properties has risen significantly. the buyers are not solely swedish investors ; foreign investors have also showed considerable interest over the past few years. during the first half of 2006, foreign investors accounted for more than 40 per cent of the investment in commercial property. from a stability perspective, there are both advantages and disadvantages to foreign investors being active in the swedish property market. the advantages include the fact that a larger number of investors means that the risks are spread better and the property market becomes more liquid. however, one disadvantage with foreign ownership is that the contagion risk from other countries to the swedish property market increases. for instance, an international investor may sell swedish property to cover losses made in another part of the world. in this way, commercial property prices in sweden may change without any actual change in the domestic economy. prices for office premises have risen in all of the metropolitan regions since 2005 ( figure 2 ). however, cyclically - related factors such as rents and vacancy ratios have not altered to a corresponding degree. ever since the property crisis at the beginning of the 1990s, prices and rents have almost gone hand in hand, but this trend now appears to have been broken. real prices increased during the third quarter by 36 per cent on an annual rate in stockholm, 32 per cent in goteborg and 11 per cent in malmo. during the same period, rents rose by between 1 and 1. 5 per cent in these three cities and the vacancy ratio remained in principle unchanged. prices thus do not appear to have been driven by fundamental factors such as rents and vacancies, but instead by investors lowering their rate of return requirement. the size of this requirement depends partly on long - term interest rates, but also on how much risk investors are willing to take, what risk premium they require. as long - term interest rates have not fallen - they have more probably risen during the period, this indicates that falling risk premiums have pushed up prices. while this in itself is no great surprise – risk premiums on all kinds of high risk assets around the world have fallen in recent years, and it would have been surprising if swedish commercial property had been an exception from this trend – there is reason to question whether the current low risk premiums are reasonable. if they were to be adjusted upwards to the earlier more normal levels,