Property: buyers beware
The Local · 20 Aug 2004, 12:30
Published: 20 Aug 2004 12:30 GMT+02:00
The current low interest rates are encouraging Swedes to fight harder in bidding wars, resulting in higher selling prices and greater debt - touching levels that economists say cannot be sustained. And now, they warn that the bubble could burst as unemployment refuses to go down and interest rates creep up.
Economics professor Bengt Turner from Uppsala University told DN that it's not a good sign when prices increase faster than disposable income, while Cecilia Hermansson, an economist at Föreningssparbanken, is concerned that incomes aren't high enough to support all the debt Swedes are incurring.
"It doesn't look promising," said Hermansson. "If unemployment keeps going up, many people who paid a high purchase price will be forced to sell, and then we'll see falling prices on the market."
She said buyers should be prepared to take on more housing expenses, not just with rising interest rates but also as property taxes in Stockholm and surrounding counties go up.
If all that doesn't put you off plunging into the housing market, you might consider investing in a tape measure before you jump. Sunday's Svenska Dagbladet reported that every other apartment for sale is listed with incorrect area measurements.
Lars Engelbert, managing director of the Bjurfors estate agency, says it's a serious matter.
"If the measurement is off by seven or eight square metres, which can happen, we're talking big money."
As SvD pointed out, the average price per square metre in inner Stockholm is 30,000 crowns. While there are no formal statistics on how many apartments are sold with incorrect measurements, SvD interviewed appraisers and real estate agents and tallied an average error of two square meters in at least half of all apartments sold in Stockholm.
"This is much more common than people think," said Engelbert. "The average discrepancy on an apartment's measurements is 2.5 square metres."
Erik Carlborg, of Svensk Fastighetsförmedling, agreed.
"We reckon that maybe 70% to 80% of apartments in Södermalm have discrepancies," he said.
The only good news is that the mistakes seem to be honest. Per Bergström, of the property appraisal firm Anticimex - which has recently started using lasers to measure apartments instead of rulers and mathematics - told SvD that the errors are equally split benefiting seller and buyer.