Swedish apartment prices suffer steep drop

Apartment prices in Sweden plummeted 11 percent in December, ending a year marked by flat or declining real estate prices across the country, according to new statistics.

• 'Record number' of homes for sale in Sweden (29 Dec 11)
• Swedish realtors predict drop in house prices (8 Dec 11)
• Stockholm's 'smallest' flat for sale at 1.2 million (29 Nov 11)

Prices for detached homes, however, remained more or less stable for the month.

Apartment prices in Stockholm and Malmö fell by 3 and 7 percent respectively, reported real estate statistics service Mäklarstatistik.

Global financial turbulence as well a large supply of housing were cited as reasons behind a broad decline in the Swedish housing market during the last six months

The price fall has been especially apparent for the detached homes over the latter half of 2011.

And while prices for tenant-owner apartments (bostadsrätter) had resisted steep falls for much of the year, prices nevertheless experienced a major dip in December, falling 11 percent on average nationwide.

“The development we had during autumn has been continued with a large supply and a downward trend in prices,” Peeter Pütsep, CEO of the real estate agency Svensk Fastighetsförmedling, told the TT news agency.

The drop in prices was widespread across Sweden in 2011, but the extent varied around the country.

Throughout 2011, home prices have fallen in almost all of Sweden’s counties.

The average apartment price has gone down by one percent nationwide over the last year, while home prices have fallen by 4 percent.

”There has been a gradual downward trend and it’s reasonable to believe that this will continue throughout 2012, as long as the chaos in the financial markets continues,” said Pütsep.

During the autumn, sellers often checked to see how much their neighbours got for their home when the prices were at a premium and had expectations that were too high, while the buyers noted that the prices fell during the same period.

On the plus side, there is a chance that interest rates will remain at roughly the same level as they are today, or even drop over a longer period, thereby stabilizing the prices.

"It's hard to say how prices will develop in 2012," Pütsep said in a statement.

"We've received signals of some increased activity in the market, but it's too early to draw any lasting conclusions."