House price bubbles in the Nordic countries

Abstract

I estimate fundamental house prices for Denmark, Finland, Norway, and Sweden over the past 20 years. My results suggest that house prices were overvalued in all countries in the years preceding the global financial crisis, but that prices quickly returned to equilibrium following the ensuing housing market bust. Results suggest that house prices were undervalued in Denmark and Finland towards the end of 2019, and that they were overvalued in Norway and Sweden. Applying a separate test for bubbles, I only detect signs of a bubble in the Danish housing market in the period before the global financial crisis.