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Property boom to continue in Sweden

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11:04 CEST+02:00
Sweden's property boom looks set to continue - but at a more moderate pace. This is according to the findings of a new "estate agents barometer" put together by Statistics Sweden (SCB) on behalf of SBAB, the Government-owned mortgage provider.

The most explosive price growth is currently being experienced in Gothenburg and Malmö.

"I have seldom seen such high figures in a barometer," said Bo Sandén at SCB. "This is a really hot market."

However, Sandén acknowledged that since these are the first results from the barometer, a comparison is difficult.

Analysts described the market in Uppsala as "lukewarm". The property market in Stockholm is also robust but not quite as hot as in the other big cities.

The survey was based on the replies of 200 estate agents operating in the four cities. They were questioned about developments in recent months regarding prices, supply, demand, time it took to sell the property and the difference between the starting price and the final price obtained during the sale.

In the three largest cities, properties usually sell for a higher price than the initial asking price and the time it takes to sell a property is decreasing. Estate agents expect prices to continue rising but at a more moderate tempo.

Several favourable macro-economic factors are likely to underpin sustained property market growth. Household disposable income is expected to rise by almost 3% this year and interest rates are at historically low levels.

SBAB recently announced that they are scrapping the 'top loan' requirement - a common feature of the Swedish mortgage market.

Customers will now be able to borrow 95% of the total mortgage sum at the lower rates of interest, while most other mortgage providers only allow the lower rates of interest to apply to 75% of the total mortgage.

Usually 15% or so of the mortgage is in the form of a top loan which is subject to a much higher rate of interest.

Sources: SBAB, Svenska Dagbladet

David Murphy

David Murphy is managing director of Word of Mouth Communications

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