Swedish homebuyers feel the pinch

The purchasing power of Swedish home seekers has been reduced over the past year thanks to the steadily increasing cost of mortgages.

Swedbank’s survey of Swedes’ spending power shows that the average household has an income 32 percent higher than that needed to buy an average house. This time last year, the average household had an income 50 percent higher than that needed to buy a house.

“Over the past year, the ability to afford new homes has declined significantly,” said Swedbank’s Cecilia Hermansson.

The development comes despite steadily increasing household incomes in Sweden. This trend has been counterbalanced by rising interest rates.

There were strong variations in purchasing power across Sweden. Homeowners in Stockholm spent most on their mortgage interest payments, spending more than 20 percent of gross income on their home loan. The Helsingborg and Malmö areas followed close behind Stockholm.

In areas where housing prices are lowest, households had double the income needed to buy a home. Places such as Skellefteå, Piteå, Karlskoga, Örnsköldsvik, Gislaved and Hudiksvall fell into this category. But even in these places rising house prices and higher interest rates have reduced purchasing power.

Properties in Sweden