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Rate fears put freeze on Swedish housing market

TT/David Landes · 10 Dec 2009, 12:17

Published: 10 Dec 2009 12:17 GMT+01:00

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Over the last three months, prices for tenant-owned apartments in Sweden have climbed 5 percent, while house prices have gone up 3 percent, according to figures from property market statistics firm Mäklarstatistik.

But the upward trend reversed in November, as prices for both houses and apartments fell by 1 percent for the month as buyers appeared to take economists’ warnings about coming interest rate hikes to heart.

November marks the first month since the start of the year that apartment prices have dropped.

“We’re seeing that the price rises we had during the autumn are starting to level off. Prices however, are headed in different directions in different parts of the country and as usual it’s hard to decipher where we’re heading,” Per Johnler, head of the Fastighetsbyrån estate agent firm, told the TT news agency.

“On the other hand, the market is being driven by a housing shortage and strong demand. At the same time, we have continuing concerns about the economy and everyone knows interest rates are going to rise sooner or later.”

According to figures from Mäklarstatistik, prices for flats in central Stockholm fell in November by 2 percent, while the value of apartments in the suburbs decreased by 3 percent.

Thus, in the span of a month, the average price of an apartment in downtown Stockholm dropped by roughly 1,000 kronor ($141) to roughly 54,000 kronor per square metre.

However, several flats in the upscale Stockholm neighbourhood of Östermalm have sold for double that average price per square metre during the autumn months.

In Gothenburg, prices rose by 1 percent in downtown neighbourhoods, but fell by 7 percent in the greater metropolitan area.

Apartment prices in Malmö, on the other hand, rose by 7 percent downtown and 4 percent in the suburbs.

Prices for houses, meanwhile, rose by 1 percent in both Stockholm and Gothenburg, while dropping by 3 percent in Malmö.

Despite the current cooling in the housing market, the chief economist with Swedbank, Cecilia Hermansson, doesn’t expect housing prices in Sweden to drop precipitously next year.

“We’ve had somewhat more encouraging economic statistics during the autumn, which I think will affect sellers and buyers on the housing market. And there is probably still room for slightly higher prices in certain areas,” she told TT.

Story continues below…

“It’s probably too early to say that the upward price trend is over.”

Hermansson thinks that real estate prices will likely swing up and down in 2010.

“Right now developments are quite shaky in a number of markets, which will affect the housing market,” she said.

TT/David Landes (news@thelocal.se)

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Your comments about this article

13:24 December 10, 2009 by jhk
then again it could be the weather was so crap people stayed at home.
14:20 December 10, 2009 by Nemesis
Good, I want to buy a house next year or a small farm.

The more depressed the market, the better the house and land I acquire.
15:50 December 10, 2009 by izbz

Up ,down, up, down....I suggest it is much better to watch the bank interest rates instead of the damn satistics..Huddinge district would be a good be a good buy. They are planning to develop it into a small town in 8 to 10 years from now. Properties will go up then if you are thinking of making money. Bank interest is quite low since I binded with 3months interest deal. Bought apartment with low avgift 4 months ago in Flemingsberg, for interest I am paying less than 600kr. Avgift and interest comes to less 3500kr so cheaper than rent apartment. So good luck ,Think now
21:15 December 10, 2009 by Nemesis
@ izbz

I already own an apartment, which will have an inglass balconey soon.

I am not interested in the bank rate. It is irrelevant as I am only buying what I can afford.

600 krona avgift is lower than I have ever heard of. I will check that out.
09:31 December 11, 2009 by Abby_V
If this is your first time to invest in the market, you will need a few days time before you do it. Traditionally, buying stocks through a broker meant pinching and saving your pennies for many years before being able to invest in the stock market. If you did not have the money to get started and you wanted to get started quickly, you needed to borrow money, or even buy stocks on credit. This is better known as "buying on the margin." The convenience and ease of the Internet has leveled the playing field, allowing just about anyone to be able to invest in the market with less money than ever before. However, in order to avoid losing your shirt, you need to have a basic knowledge of investing before attempting to invest online.
10:16 December 12, 2009 by Nemesis
@ Abby_V

If you have to borrow money to invest, then you shouldn't.

That is basic common sense.

Invest what you have spare, not what you need to pay bills.
20:30 December 12, 2009 by izbz

The bank interest is 600kr and avgift is 2900kr, you misunderstand what I mentioned earlier. But is still cheaper than renting an apartment.

Anyway it is very wise of you to consider buying a bigger place. Friend of mine bought a house 9 years ago for 2.3 million after selling his apartment, now the house is worth approximately 4 million. I guess even if we save for 10 to 15 years, we won't be able to save

1. 7 million unless we are earning alot or doing some buisness.
08:51 December 14, 2009 by KaseyP
Climate change can really affect not only the bank rate but also the livelihood of the people. This could be one of the basis that everything is changing. The immediate reaction by mortgage companies to the housing market collapse was to tighten credit. They pulled in the reins so much that almost no one who needed money could get it. This seemed a justifiable reaction considering the magnitude of the economic turmoil. A problem with looking back too long is that it doesn't encourage moving forward. The role of appraisers now has become one of defender of the bank. They may have swung too far the other way, and are being reactive to the crisis just like they were to the conditions that caused it - and those that don't study the past are doomed to repeat it. The truth is that no deals mean nobody gets any money.
22:40 December 17, 2009 by Brucelee@stockholm.sweden
KaseyP, do not mention climate change, please dont, if you do not understand why, let me tell you: that is a fake topic used by politicians to manipulate public attention, for some other purposes, not for you to talk, OK? do you know mother earth have several glacier time in her history? do you know sun controls our weather? do you know human has absolutely nothing to be capable of change weather? think about it.

I see many one of your kind, do not think, just follow others, chew others' chewed, sad.
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