(edit title) Advice on buying a flat in Sweden Your thoughts on property investment in Gothenburg Options

[MasterR]

I have lived in Gothenburg for over a year now and my fiancée and I have decided to buy a flat.

We have a deposit of 500 000kr and get get a mortgage of 1 000 000kr. If we wait for fiancée to finish her studies and get a full time job we will be able to get a mortgage of 1 500 000kr. So we can buy a flat now for 1.5 million or wait 2 years and get one for 2 million.

My Questions are..

• Is it a good time to buy a flat now? I know the interests rates are low but are the flats prices higher because of that?
• If I was to buy a flat now and then sell it in 3 years time what is the likely hood of making a profit/loss on the flat? Do you think its worth to wait 2 years or go ahead and buy one now?
• Does anyone know of any links to property prices in Sweden and how they have changed over the years?
• Any other general information about buying a flat in Sweden from those who have already done so would be greatly appreciated!

Thank you

[Bender B Rodriquez]

Is it a good time to buy a flat now? I know the interests rates are low but are the flats prices higher because of that?

No, it is definitely not a good idea to buy a flat now. At least not as investment. Prices are stagnant and to combat the increasing private debt two things will likely happen: 1. The government will introduce regulations to lower the private debt, leading to lower prices. 2. The market will crash.

[PDX]

How about this alternative scenario then:

The government removes all restrictions on apartment rental, ownership and profit making from such activities (as elsewhere in Europe). This leads to lots of new demand in apartments as pure rental investment vehicles (it is not unusual for moderately wealthy people in other countries to own e.g. 10,20, or 100 apartments). Prices and rents soar to normal (market) level.

~~~PDX~~~

[Bender B Rodriquez]

It is nice thinking but unfortunately that will never happen in the current political climate.

[PDX]

I thought so too, but they did take that very tiny first step of allowing one to charge for both the BRF fee as well as one's own capital costs associated with the loan taken for the property.

The direction is definitely positive, though I agree that momentum may not be there. Oh well, there is no way the system is going to last another 20 years

~~~PDX~~~

[Bender B Rodriquez]

Yes, I predict a crash before any change will happen in that direction.

[PDX]

All right, I am instead predicting that market economy will finally arrive to this North Korea of Europe

~~~PDX~~~

[Mib]

As with all predictions, especially ones on a forum...take them with a pinch of salt. In other words, don't treat them as expert advice. The sheep predicted property prices would continually grow and they crashed. The sheep then predicted a crash, they reduced in price, but not crashed, unless yo bought a horrible place in a bad location etc.

As per usual, I would recommend buying a place as close to the centre as possible with good access to transport and plenty of employment. If you have the skills and patience, buy a place that needs doing up. I never bought based on what was happening in the market....I bought on the need to have my own home. It has served me well...that had I chosen the rental route, I would have far less capital than I have now. However, I repeat the fact that unless you're buying more than 1 place, then the value of your home is really an illusion. ie. It goes up by 500,000kr...but then you want to sell up and buy a similar place or maybe upsize. Those properties will have gone up by a similar amount if not more...+ costs of moving, capital gains tax on the profit when selling, estate agent fees etc.

So in my honest opinion, based on experience...is buy a home if you want to. The only thing you should do is check the local market for the average sqm cost, set your budget to include all of your costs and stick to it. Don't stretch yourself. Again, in my honest opinion, get a fixed rate of 3 years or more as it's unlikely that rates will fall any futher, but I suspect they will be higher in 3 years time...but who knows what will happen. Euro collapse, countries leaving the Euro, anothe credit crunch.

So as I say...ignore the advice on here...DO YOUR OWN RESEARCH

[Yorkshireman]

It is nice thinking but unfortunately that will never happen in the current political climate.

It is already happening, with the latest changes for BRF subletting, rents will rise. Also, less mentioned in the media is that the renting apartment owners have a number of test cases that will be processed by Hyresnämnden, they are trying to push up rents in certain locations by 20/25% this year. What many people didn't realise is that there was a minor change to the law a little while back that states location can play a greater role in rent setting, so Fastighetsägeras association (the opposite of Hyresgästförening) have agreed to token big hikes in rents as test cases. If they are successful, then expect in prime locations that rents will also increase.

In addition to that, one of the recommendations to Sweden from the EU Commission to stablise the housing market price rises is that the rent controls be removed. Many of the other measures the EU recommended to Sweden are already under implementation, but removal of rent controls is seen as a key stabiliser for the purpose of removing the effective cost difference between renting and buying, and that does not mean crashing the purchase prices, more rather increasing rents.

[wendist]

In what way may this development be beneficial to the 51% of the population with the lowest income?

[Yorkshireman]

Who said anything about a benefit for those on low incomes?

What it means is that in prime locations that currently have lower than what the real market rate should be rents, will go up, and those on lower incomes will have to move if they cannot afford it. However, there is an anticipated lowering, or not rising of rents, in areas where locations are considered as lower rent areas. ie. not as attractive to rentors. So in that respect there is a potential benefit.

Another reason for leveling the playing field between rental and purchase is to encourage property developers to invest in more rental properties, just now the returns in many areas are not significant enough to encourage that.

[hatim]

OP: I thought that one only needed to deposit 15% for loan. And for a 1 million property you are putting in 50% deposit.

If you have a recurring source of income then it's ok, but I think it's a bad idea to put all your money in one basket.

If I had 500,000 right now I would buy a crappy house 1-2 hours away from Stockholm. At least it would be mine.