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Swedish realtors fear falling property prices

Geoff Mortimore · 12 Aug 2011, 12:38

Published: 12 Aug 2011 12:38 GMT+02:00

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"It is going to be tough for vendors. All signs are pointing to a drop in prices,"said Henrik Rundgren, of real estate agent Notar, to Swedish daily Svenska Dagbladet (SvD)

The weekend of August 20th and 21st is often when more apartments and houses are shown than any other time, and this year looks to be no exception, with propective buyers back from their holidays.

However, indications suggest that this year could see falling prices and a good chance for buyers to negotiate price decreases.

Finance minister Anders Borg warned on Thursday that the government will need to revise down its strong economic growth expectations for 2012, due to the global financial market turbulence.

Just how much of a knock-on effect this will have on property prices remains to be seen.

"The recent turbulence makes it really hard to make predictions but we are hoping for a continuing stable market, with prices moving by just a couple of percent one way or the other,” Andreas Jonsson, senior analyst at Nordea, told The Local.

“On one hand the indications are that the lending rate could go up, which would have an effect, but the economy in Sweden is still holding up reasonably well and salaries are also rising, so one should counterbalance the other.”

Much will also depend on forecasts from the Riksbank, which will unveil its plans for interest rates on September 6th.

With supply said to be greater than normal at this time of year, it means the buyer is in a strong position, while for the seller it could be a tough weekend, according to experts.

There are still many apartments left unsold from May and early June that agents will now try to sell once again after the summer break, meaning that the increased supply is likely to create downward price pressure.

Story continues below…

Latest statistics show that apartment prices fell by 4 percent in June and SEB's latest property price indicator shows that more people expect property prices to fall rather than rise.

Not everyone is predicting such gloom though.

“There are a lot of mind games, but as long as unemployment does not increase and interest rates don’t pull away, I do not think prices will be affected”, Michael Archer, mortgage manager at Nordea told SvD.

Geoff Mortimore (mortimore.geoff@gmail.com)

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Your comments about this article

14:59 August 12, 2011 by Abe L
And the fact that getting a mortgage these days isn't all that simple either. Most banks require harsh down payments which for new buyers usually takes years (if not decades) to save up. Making a house acquisition more out of reach.
15:11 August 12, 2011 by canuk
the problem is this 15% down, it has always been that which has caused the decline in turnover of properties. people live month to month in sweden, having over 100,000 just sitting in the bank is not very common. unless you come from a rich family, you are not going to have the funds to buy something.
15:58 August 12, 2011 by Uggla
That and the fact that: Jobs = Money, No Jobs = No Money, No Money = No Buying!
16:20 August 12, 2011 by JLondon

I agree with you. People speculate the house prices, and gossip about more for your money compared to the UK and other nations , but as said, many people in sweden and around the world live on a day-to-day basis.
16:50 August 12, 2011 by psg2785
yes, 15% down payment can be seen as a problem, at the same time property price in Sweden is much lower than UK, France or other EU countries, while salaries tend to be better than in those countries, so if you think you have it bad here, well, it's much worse elsewhere... At least, here, a couple where both earn reasonably well can really think about saving hard for a few years to eventually buy something. That is a feasible plan.
17:17 August 12, 2011 by Great Scott
This is the moment, Borg has already played his get of jail card. Now with the financial crisis deepening, unemployment will continue to grow and house prices as well as the economy will collapse.

Borg will then put his hands up and say it wasn't may fault.

But wait there is very positive side to all this, once house price have collapsed, deposits will be a hell of a lot less, look and the bright side.

Sorry that's as long as you don't lose you job.
17:31 August 12, 2011 by Mib
In Sweden, you tend to pay interest only mortgages, which have virtually disappeared form the UK market.You have 30% mortgage tax relief and no "stamp duty which varies from 1% to 5% of the total price in the UK, depending on the price of the property.As mentioned previously, property prices tend to be much cheaper if you compare with the likes of the UK (rabbot hutches) and other major EU countries. Add to the fact, that Swedish people don't have to pay for University education, then you have an advantage over the UK.

But, just like our parents or grandparents before, we should not expect it to be a right to own our own property. The main problem in Sweden as in the major cities where the artificial rental rates have created massive waiting lists and a black market in 2nd hand properties. This in itself forces people to buy who can afford it, which pushes up prices. Again in our parents/grandparents day, they had to have a good deposit before the bank would lend them money to buy a property. Yet, some people think that they should not have to do that. Yet, that is the very attitude combined with greedy bankers that got us into this credit crunch which is still causing us problems 3 years later. So, a 15% deposit is in my mind the right way. When I wanted to buy my first property, I saved very hard for 2 years, worked overtime whenever it was available, massively restricted my spending for fun things. It was tough, but I did it! I know if I tried to do it now, it would take me longer, but I would have done it. I was brainwashed into not taking on massive debts.

The one major thing that has saved Swedish property prices from going even higher in the past is the Housing Associations rules to stop people from speculating by only allowing the owner to live in their apartment with a few exceptions ie. working way for a year. Add to that the rental price limits and there is no incentive to speculate on apartments. That alone has massively increased prices in the UK, Spain, Ireland etc.

So..in my opinion, you have it good in Sweden. If you're young and don't ave a job despite trying hard or due to lack of qualifications, either go back to education or do as the Irish do....emigrate to another country and try your luck. Better that sitting at home twiddling your thumbs or like a sizeable minority of English...rioting and looting :0)
23:08 August 12, 2011 by axiom
if the central bank keeps moving interest rates up the housing market will be strained.

the requirement to have 15% deposit in hard cash already puts a strain on people who simply join the long queues to rent at artifical rates.

If rental rates were more market based, more people would consider buying as an option keeping the housing sales vibrant.

the flipside of course is that this would drive up house prices even more and possibly create the other trend where those who can afford to, buy all the houses and rent them at artifically high rates.

the housing rentals need greater regulation and encourage people to get on the housing ladder while keeping the rental stocks for those who can't afford to buy or are just moving on their own, making for a vibrant housing market but one that is cooled by the stock of rental options available.

that said, housing prices in Sweden are not exceptionally high, but compared to the rest of the country Stockholm has some slack to loose, 5 - 10%.
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