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HOUSING

Swedish flat prices more than double since 2000

While Swedish apartment prices have risen by more than 150 percent in the last ten years, housing prices dipped overall in December, according to new statistics.

Swedish flat prices more than double since 2000

Prices for tenant-owner apartments (bostadsrätter) in Sweden have risen 153 percent since 2000, but prices dropped by an average of 4 percent across the country in December, fresh figures from the real estate statistics website Mäklarstatistik.

In central Malmö, flat prices fell by 7 percent, while prices dropped by 3 percent in central Stockholm.

However, apartment values in Gothenburg rose by 4 percent.

Prices for small houses and apartments in Sweden remained unchanged in the final quarter of 2010, while the trend for the year as a whole showed a continued price increase.

Despite the December price drop, Lars–Erik Nykvist, the CEO of estate agency Fastighetsbyrån, believes Swedish house prices will continue to climb during 2011.

“December is not a high sales month and isn’t typical when it comes to overall sales trends,” he told The Local.

Nykvist also saw little risk for a Swedish housing bubble.

“I don’t see any risk for a price bubble in the near term, since demand remains higher than supply,” he said.

Part of the reason, Nykvist explained, is the structure of the Swedish housing market.

“From an international perspective, the Swedish housing market has very few properties which people buy as speculative investments,” he said.

“In Sweden, people live in the properties they buy. When you buy a tenant-owner flat, for example, the tenant association rules are very clear that you should be living there rather than using it as an investment.”

In the last 10 years, the price of tenant-owner apartments nationwide has risen by 153 percent, while small houses have grown in value by a comparatively modest 72 percent.

In 2000, buyers had to pay 8,314 kronor per square metre ($115 per square foot) for a flat in Sweden. But by the end of 2010, Swedish apartment prices had risen to 21,057 kronor per square metre ($293 per square foot).

In Gothenburg, however, flat prices have more than tripled since 2000, from 5,862 to 18,618 kronor per square metre — a rise of 218 percent, representing the largest increase in the country in the last 10 years.

Meanwhile, Malmö has seen the biggest jump in small house prices, which have gone up 131 percent in the last decade.

“Price trends have clearly been affected by extremely low interest rates in the last few years and so far the mortgage ceiling hasn’t had a marked effect on prices,” Peeter Pütsep, CEO of Svensk Fastighetsförmedling, said in a statement.

While Pütsep expects Swedish housing prices to continue rising in 2011, he doesn’t expect price increases on par with those of 2010, when tenant-owner apartment prices rose by 7 percent and small house prices rose by 3 percent.

According to Nyqvist the effects of the mortgage ceiling have been marginal at most. The new mortgage cap, which went into effect in October, limits the size of a mortgages to no more than 85 percent of a property’s market value.

“It takes a long time for changes like the mortgage ceiling to have an effect,” he said.

He added that one trend reported by agents following the introduction mortgage ceiling, however, has been an increase in demand for homes that aren’t in need of renovation.

“With the ceiling, it becomes harder for people to then borrow more money to renovate a property. As a result, more people want to buy places where they can move in without having to make and major upgrades,” said Nykvist.

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PROPERTY

These are our readers’ top tips for buying a property in Sweden

Buying an apartment or house in Sweden can be a daunting process, but with rentals so hard to get, many foreigners end up taking the plunge. Here are the top tips from readers who have done it.

These are our readers' top tips for buying a property in Sweden

Get prepared! 

Most of the respondents to our survey stressed the importance of preparation. 

“Spend time on defining your requirements properly, including visits to different locations to narrow down your search,” advised Julian, a Brit living in Malmö. 

As well as working out your requirements, other participants argued, you should also get to grips with the way the bidding system works in Sweden, with one British woman recommending buyers “speak to professionals about the buying procedure”. One respondent went so far as to recommend hiring a buyers’ agent, something international employers sometimes provide for senior executives moving to Sweden. 

Elizabeth, a 26-year-old charity worker from South America, recommended that all buyers “learn to read a bostadsrättsförening årsredovisning”, the finance report for a cooperative housing block. (You can find The Local’s guide here.) 

Get to know the market 

Maja, an anthropologist from Hungary, said it was important to take time to get a feel for the market, suggesting buyers visit different areas to find the one that they like. 

“It will take 6-12 months easily,” she predicts. “Don’t rush. Visit the neighborhoods where you are thinking of buying.”
 
Others recommended spending time surfing Sweden’s two main housing websites, Hemnet and Booli, to get a better feel for how much different types of housing in different areas typically sell for, before starting to look seriously yourself, with one even recommending going to viewings before you have any intention of buying.  
 
“Start visiting houses and monitoring bids. That will give you a sense of the process,” recommends Shubham, 31, a software engineer from India.
 

 
Think about your expectations
 
While house prices have soared in Sweden’s cities over the past decade, the same is not the case in all rural areas, something some respondents thought buyers should take advantage of. “To buy a house at a lesser price, look at areas as far from urban areas as is possible for you and your family,” wrote Simon, a 61-year-old living in rural Sweden. 
 
Julian warned bidders against areas and types of homes that “will attract tens of ‘barnfamiljer’ (families with children), meaning “bidding wars will result”, pushing up the price. 
 
On the other hand, one respondent warned people to “avoid buying apartments in vulnerable areas, even though prices will be lower there”. 
 
An Italian buyer recommended looking at newly built apartments coming up for sale. 
 
 
Get a mortgage offer before your first serious viewing 
 
Getting a lånelöfte, literally “loan promise”, can be tricky for foreigners in Sweden, as our recent survey of banks’ policies showed. 
 
Shubham warned against applying for a loan promise from multiple banks, arguing that this can affect your credit rating if your finances are not otherwise good. He suggested using an umbrella site like Ordna Bolån and Lånekoll, although he warned that the payment they take from the ultimate mortgage provider might ultimately be taken from borrowers.  
 
READ ALSO: 
 
Get to know the estate agents, but don’t necessarily trust them 
 
Gaurav, a sales manager based in Stockholm, recommended getting to know local estate agents in the area where you are planning to buy, as they might be able to direct you towards owners who are in a hurry to sell. “Those can be the best deals as you have greater chances to avoid bidding on such properties,” he argued. 
 
Maja, from Hungary, warned, however, against believing that the estate agent is on the buyer’s side. 
 
“You cannot really make friends with them, they work for commission and they will also try to raise the selling price,” she said. “It’s how they present you to the seller that matters. Seem like a serious buyer.” 

 
Should you try to make an offer before bidding starts? 
 
Morgan, a 33-year-old marketing manager from France, said it was worth studying the kommande (coming soon) section on Hemnet and Booli to spot houses and flats before they are formally put on the market. “Be alert. Book an appointment asap and get a private visit to reduce competition. If the apartment is what you’re looking for, make a reasonable offer with a condition to sign the contract in the next 24 hours,” he recommends. “You will cut the bidding frenzy and save money.”
 
Gaurav also recommended getting a private viewing and making an offer while the property was still off the market, as did Julian. 
 
“If you are lucky, you might find owners who are in a hurry to sell,” Julian said. “Those can be the best deals as you have greater chances to avoid bidding on such properties.” 
 
But other foreigners warned against bidding before a property is publicly put up for sale on housing websites, arguing that estate agents used this as a way of getting higher prices than they would expect to get at auction.  
 
“You are essentially negotiating directly with the owner, without finding out the actual market price via bidding,” argued a 31-year-old Indian business analyst. “Usually this will work only for an apartment not in top condition.” 
 
What to watch out for in the bidding process 
 
Morgan advised buyers to take what estate agents say about rival bidders with a pinch of salt. 
 
“Estate agents will play the competition card. Don’t fall for their trick and keep a cool head. Ask yourself if it really worth it before increasing a bid,” he wrote. 
 
In Sweden, it is possible to make a hidden bid, which is not disclosed to other bidders. One Indian software developer warned that estate agents would often claim that there was such a bid to pressure you. 
 
“The hidden bids are really confusing as you don’t know the bid placed,” he said. “It’s a trap to get higher bids. “
 
A 21-year-old Romanian agreed it was important to watch out for estate agents who try to rush or panic you. 
 
“[Look out for] those that try to rush you into it by saying stuff like ‘this will be gone by Monday, the owner wants to sell fast’, or if they don’t want to include a two-week period to have the property inspected as a clause in the contract,” she said. 
 
Maja recommended choosing an estate agency that required all bidders to supply their personal number, with all bids made public, “because other agencies might cheat that price rise”. 
 
“Don’t be the first bidder,” she added. “Keep your cool, and if the agent calls or messages, just hold on. There is no official end to the bidding. Only when you sign the contract. So the best game is to seem very serious but not stupid. You have a budget, and try to sign the contract the same day or the next if you are the highest bidder.” 
 
Is now a good time to buy? 
 
The respondents were, predictably, divided. 
 
“It’s risky for both sellers and buyers,” said Carl, a Swede who recently returned home from China. “The market seems to correlate pretty well with central banks raising interest rates. If that’s the case, then it’s still a sellers’ market since central bank [Riksbank] will continue to increase interest rates until 2024.” 
 
“It’s difficult to predict anything at the moment,” agreed Gaurav. “Prices should fall a bit but that’s not happening in all the areas. Avoid buying or selling if you can for a few months.” 
 
“I see there is no difference in buying in total cost. You can get a property at a lower price but end up paying more in interest and the price is the same in five to ten years,” said one Indian software engineer. “Buying is still better than renting.”

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