The strong increases in prices in the Swedish stock market indicate that there are expectations among those who handle risk capital that profits will increase sharply particularly in Swedish IT-related companies. In order for such a development to be realised, it is reasonable to assume that investment must increase on a broad front. A risk with a strong increase in share prices before any visible signs of potential growth accelerating is if consumption is strongly stimulated by households who own shares increasing their wealth. An increase in demand that is not corresponded to by an increase in potential growth increases inflationary pressure that the Riksbank must counteract by increasing interest rates. However, increased interest rates also subdue increased investment, which is unfortunate, as it would brake the growth of capacity. It has been difficult during earlier periods of large increases in share prices to prove that Swedish households have really increased their consumption as a result of increased wealth. During recent years, however, the proportion of households owning shares has increased. When property prices increased sharply at the end of the 1980s, many households raised loans on their homes and used the money for consumption. A low housing production combined with growth that is strongly concentrated to the big city areas has contributed to housing prices again rapidly increasing in recent years. This development can also stimulate consumption with the risks that I have just mentioned.
The Government has enhanced its efforts in this area by raising the capital of the Fund by Rls 9.0 billion to Rls 92 billion as from 2006. However, the accelerated population growth and the rising demand for housing have urged the creation of other real estate financing mechanisms in addition to the government’s financing mechanism. More finance and contribution by the private sector and reducing reliance on the government will give the private sector an opportunity to play a key role in this area which offers lucrative investment opportunities. Nonetheless, it is fair to say that the private sector in general and the banking sector in particular seek to obtain more guarantees to enter as financers in this vital sector. This demands working effectively by all relevant entities to develop mechanisms for meeting the rising demand in this sector. Dear Brothers, Over the preceding years, the Kingdom of Saudi Arabia has undertaken many economic reform measures, updated and streamlined its laws and regulations, restructured the national economy, approved a number of mega development projects, and joined the World Trade Organization (WTO). It has also made many important decisions aimed at attracting foreign investments and continued opening of the markets which will be reflected on the competitiveness of the national economy. All these positive developments are an incentive for investment in the Kingdom in general and in the housing sector in particular. Dear Brothers, This conference is held at a time when the Kingdom has achieved outstanding development results in all sectors of the economy.