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REAL ESTATE

Cohousing: it’s not just for hippies anymore

Most people associate Swedish cohousing with the hippie lifestyle of the 1970s, but the updated model of communal living might impress even the most skeptical, contributor Malin Nyberg discovers.

Cohousing: it's not just for hippies anymore
Residents gather for dinner at the Dunderbacken cohousing community

If you think collaborative housing means no privacy, then think again. These days, life in a cohousing community can include your own flat as well as a common dining room, library and even a gym shared with your fellow neighbors.

“It’s all about making life easier and meeting new people,” architect Ingela Blomberg explains.

“The idea is not to live with each other 24/7 but to share common spaces and have the option to socialise with your neighbors when you want to.”

For the last 30 years, Blomberg has worked with BIG (Bo i gemenskap – ‘Living in a community’) to promote cohousing communities and it seems like all the hard work has paid off.

“Thankfully it’s becoming more popular and we have seen an increase in applications to flats in those houses lately,” she says.

Blomberg also adds that she has noticed a growing international interest in cohousing.

“We held a big conference in May last year where people from all over the world took part. Sweden tops the European list together with Holland and Denmark and we seem to inspire others,” she explains.

There are currently 45 cohousing communities registered in Sweden, 16 of which can be found in Stockholm.

Most of the communities have rules that place certain demands on members living there, such as participating in a cooking team every 4 to 6 weeks.

According to a survey done by Swedish housing market website Boplats, one third of those questioned would like to live in a cohousing community with a modern twist.

Lina Wendt-Rasch from the Kupan cohousing community in Stockholm can see why.

“It’s the perfect solution, especially if you have small children,” she says.

Wendt-Rasch has lived in Kupan with her husband and two children for three years and says she finds it important to let her kids socialise with adults and other children from an early age.

“That was the main reason for moving here. In addition, my husband and I get the chance to talk to adults every day and having dinner ready and served definitely makes life less stressful,” she adds.

Dunderbacken, a brand new cohousing community in Stockholm which opened in August last year, was built in cooperation with municipal housing company Familjebostäder.

On a recent evening, resident Jörgen Larsson, one of 65 people living in Dunderbacken, is waiting for other members to show up for a study group meeting. He has lived at Dunderbacken since September and is very pleased with his choice.

“It’s weird that not everyone is interested in living like this, but I suppose it’s easier in a way to just shut yourself out from the world, watching TV, hiding under your duvet. It does take a lot of courage for people to socialize,” he says.

When asking if residents at Dunderbacken ever argue with one another Larsson laughs, saying: “The only thing we haven’t agreed on is that some of us want a gym and some of us don’t.”

Perhaps surprisingly, the founder of Dunderbacken, Birgitta Hambraeus, has a political past in the Centre Party, a centre-right party with roots in Sweden’s rural communities.

“While collaborative housing was once associated with a left wing political stand, this is no longer the case,” Larsson explains.

“We have a mix of different kinds of people here.”

Becoming a member of a cohousing community does require a bit of effort, however, often requiring potential tenants to go through a number of interviews.

“My application was followed up by a two hour-long interview where they asked a lot of questions about me and what I could participate with when it came to study groups and so on,” new Dunderbacken resident Hans Letterblad explains.

But he believes the extra effort was well worth the trouble.

“I really like it here. There is always someone around and loads of activities to take part in,” he says.

Famijebostäder spokesperson Björn Jacobson hopes the company will build more cohousing community buildings in the future.

“We have built five cohousing communities since the 1990s and will continue as long as people are interested,” he explains

“While most of those houses have an over-40 rule, we hope to see age groups mix in the future. It’s a great arrangement, especially for those living in big cities where people can get pretty isolated and lonely.”

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PROPERTY

EXPLAINED: Will Swedish housing prices plummet as interest rates rise?

The Swedish financial supervisory authority warned on Wednesday that rising interest rates could lead to house prices falling "quite sharply". How likely is it that this will happen?

EXPLAINED: Will Swedish housing prices plummet as interest rates rise?

What financial circumstances might make it difficult for borrowers to repay loans?

With an increase in the cost of living, including rising interest rates and rising electricity prices, there are plenty of circumstances that may make it difficult for borrowers – especially those holding large debts in relation to their income – to repay their mortgages.

Households with large debts are therefore more sensitive to an increase in interest rates, according to the Swedish financial supervisory authority, known in Swedish as Finansinspektionen (FI).

The agency published its annual Swedish Mortgage Market report on Wednesday.

“Large debts also mean a higher sensitivity if you were to suffer unemployment during an extensive recession,” said Henrik Braconier, the authority’s chief economist.

Other factors that could stretch borrowers’ finances include rising energy prices, higher food prices, and growing inflation.

“Apples, oranges, tomatoes have gone up by 30 percent,” said Américo Fernández, a household economist at SEB. “Wheat is coming from Ukraine and it’s getting harder and harder to get hold of.”

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Will homeowners become unable to repay their mortgage loans?

Not according to Fernández.

“One of the last things Swedish households will fail to make their payments on is their mortgage and their houses,” he said. “They would rather decrease their spending on vacations abroad, or restaurants.”

The FI report noted that most new mortgages include margins that allow for fluctuations in the borrower’s finances. This means that mortgage holders have a cushion that allows them to handle financial changes.

“Our stress test shows that they can handle increases in the interest rate and also loss of income,” said Magnus Karlsson, FI’s director of macroanalysis. “New mortgages have margins in them calculating discretionary income, and will be able to absorb increases in interest rates and loss of income.”

SEB foresees an interest rise of up to three percent over the next two years, Fernández said,an increase that can be absorbed by most households.

Both Fernández and Karlsson agreed that if homeowners have to cut back on spending, those cuts will not come from debt repayment, but from their disposable income – the money they might ordinarily spend on entertainment, eating out, or travelling.

So while household spending may have to change, financial stability is not at stake for most households.

What’s going on with the housing market?

Right now, a record number of mortgage-holders have loans that are worth more than 4.5 times their income. This year, more than 14 percent of new mortgagors took on such large loans, compared to 6.3 percent last year.

A “low interest rate, increase in housing prices, increase in disposable real income and a housing market that is not functioning well” are all factors in the large debts that homeowners have incurred today, Karlsson argued.

Fernández noted that there is an imbalance between the low supply of housing and the high demand for housing, which is in part responsible for the high housing prices we see today.

He said a decrease in price of a few percentage points would not be surprising: “We’re coming from two years of exaggerated prices.”

Will housing prices begin to decrease after two years of increasing prices?

Calculations for three different scenarios tested by FI show that housing prices will decrease, Karlsson said.

While the agency does not predict housing prices, its report shows that under three different scenarios – the first an increase in mortgage interest rate, the second an increase in energy prices, and the third a combination of the first two with a reversal to pre-pandemic housing preferences – prices will decrease.

The Local Sweden reported last year about increasing housing costs in Sweden, spurred on in part by a desire for bigger homes further away from urban areas during the COVID-19 pandemic.

Fernández called the two years of increasing housing costs “surprising.”

“10-12 percent two years in a row, that’s historical in these uncertain times,” he said, noting that prices were still increasing in figures for March this year.

What sorts of housing will see the largest price decrease?

The FI report also included various scenarios of how the price of different types of housing may fluctuate based on changes in the interest rate.

One scenario assumed a 1 percent increase in interest rates this year and a 0.5 percent increase next year, and predicted that while the price of apartments owned in a cooperative – called bostadsrätter – would fall only slightly, the price of detached houses would fall by 10 percent.

Another calculation that accounted for rising electricity prices and a decline in new housing purchases found that the price of bostadsrätter and detached houses risked falling by an average of 30 percent.

Is there a plan to let borrowers end their mortgage terms early?

“We believe it needs to be simpler and more inexpensive for households to repay their mortgages early,” FI Director General Erik Thedéen is quoted as saying in a press release published by the agency on Wednesday.

To that end, Thedéen said at a press conference that the agency had sent a request to the government to change the calculation model for how banks are compensated when mortgages are terminated early.

“When you terminate a loan agreement and the bank incurs costs, it must be reimbursed,” Thedéen said. “But at present the banks are overcompensated, that is what our calculations show. If the government follows our line and changes the model and follows our line, then the banks must simply adapt.”

When asked about the likelihood of this request being granted, FI recommended reaching out to the Ministry of Justice for comment.

What does this mean for foreigners in Sweden?

If you’re already a mortgage holder, then as Karlsson and Fernández assured, mortgage calculations include a cushion that allow for changes in your financial circumstances.

If homeownership is in your future, housing prices may begin to decrease in the near future, so it’s worth keeping an eye on your local real estate listings.

By Shandana Mufti

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