We examined what drives Swedish real estate price changes in general and whether or not Swedish real estate is currently overvalued. We examined if money supply is an important factor in particular. In accordance with previous research in the field, we estimated an Error Correction Model (ECM) using quarterly data from 1987-2011 to determine what factors were significant and used these factors to and their coefficients to explain the Swedish real estate price development in this period. We found that bank lending rate, financial wealth, disposable income, unemployment and money supply were determining factors in the short- and/or long-run. The first for factors being significant is in accordance with previous studies, whereas money supply is seldom an explanatory variable in previous research using an ECM model. However, the effect of money shocks on real estate prices has been confirmed in a wide range of studies. Possible policy implications of this finding depend on how money is viewed by the policy maker. Using our long-run model and the actual values of the variables, real estate prices are found to be at their long-run equilibrium and 93.5 percent of the change in real estate prices was explained by the model. We therefore concluded that there is no overvaluation of Swedish real estate.