Swedish realtors predict drop in house prices

A survey, carried out by the Association of Swedish Real Estate Agents (Mäklarsamfundet) on 1,800 realtors countrywide, shows that 54 percent believe that small houses prices will fall in the near future.

”The stress is on slightly decreasing prices in the prognosis for development up until February 2012. However, compared to the last prognosis, the outlook is more optimistic,” said Claudia Wörmann, head of analyses at the association.

According to Wörmann, the estate agents make similar predictions for tenant-owner apartments.

One of the reasons is that banks are being more restrictive with their money and that it has become much more difficult to qualify for a mortgage.

Bleak news reports about the state of the economy, coupled with the banks’ more restrictive measures are also contributing to both buyers and sellers feeling worried and taking a step back today, according to Wörmann.

At the same time, real estate agents have noted that those who were active on the property market in the 90s tend to be more laid back about the current situation

”Many realtors are saying that there is a tendency within this group to want to pay off more of their mortgage debts, than those who don’t remember the 90s. Also, they are more reluctant to borrow more than they need. They aren’t as worried about the state of the market either, partly because the current interest rates are low compared to back then,” said Wörmann.

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Swedes’ mortgage debt continues to swell

Swedes are borrowing money more than ever, data from Statistics Sweden revealed on Wednesday, as household indebtedness reached new heights.

Swedes' mortgage debt continues to swell
An apartment block in Malmö. File photo: Simon Paulin/TT

The annual growth rate of household indebtedness was calculated to be 4.9 percent in October this year, a 0.1 percentage-point increase in one month. Statisticians at the state agency predicted that the increase will continue, and cited the upswing from 4.5 percent in January 2013.

In total, Swedes have borrowed nearly 2.9 trillion kronor ($440 billion). The net increase from October last year is 134 billion kronor. 
Statistics Sweden said that mortgages stood for the lion's share of the increase – around 115 billion – which by October this year had reached an annual growth rate of 5.2 percent.

The Swedes are also increasingly borrowing money for non-household related expenditures, known in Sweden as consumption loans. The borrowing rate in that sector has now hit an annual growth rate of 3.9 percent.

The Swedes still enjoy low interest rates – as the Riksbank has pegged the national repo rate at one percent for the time being. Its executive board said in October that it did not forecast raising the repo rate until late 2014 at the very earliest, citing the need to support the economic recovery.

Two board members expressed a wish to lower the repo rate further to 0.75 percent.

Swedes with adjustable-rate mortgages saw the rates increase slightly from 2.94 in September to 2.95 in October. Home-buyers who bought a place to live in October had on average a 2.84-percent interest rate, a decrease from September's 2.87.