SHARE
COPY LINK

REAL ESTATE

Swedish apartment prices suffer steep drop

Apartment prices in Sweden plummeted 11 percent in December, ending a year marked by flat or declining real estate prices across the country, according to new statistics.

Swedish apartment prices suffer steep drop

Prices for detached homes, however, remained more or less stable for the month.

Apartment prices in Stockholm and Malmö fell by 3 and 7 percent respectively, reported real estate statistics service Mäklarstatistik.

Global financial turbulence as well a large supply of housing were cited as reasons behind a broad decline in the Swedish housing market during the last six months

The price fall has been especially apparent for the detached homes over the latter half of 2011.

And while prices for tenant-owner apartments (bostadsrätter) had resisted steep falls for much of the year, prices nevertheless experienced a major dip in December, falling 11 percent on average nationwide.

“The development we had during autumn has been continued with a large supply and a downward trend in prices,” Peeter Pütsep, CEO of the real estate agency Svensk Fastighetsförmedling, told the TT news agency.

The drop in prices was widespread across Sweden in 2011, but the extent varied around the country.

Throughout 2011, home prices have fallen in almost all of Sweden’s counties.

The average apartment price has gone down by one percent nationwide over the last year, while home prices have fallen by 4 percent.

”There has been a gradual downward trend and it’s reasonable to believe that this will continue throughout 2012, as long as the chaos in the financial markets continues,” said Pütsep.

During the autumn, sellers often checked to see how much their neighbours got for their home when the prices were at a premium and had expectations that were too high, while the buyers noted that the prices fell during the same period.

On the plus side, there is a chance that interest rates will remain at roughly the same level as they are today, or even drop over a longer period, thereby stabilizing the prices.

“It’s hard to say how prices will develop in 2012,” Pütsep said in a statement.

“We’ve received signals of some increased activity in the market, but it’s too early to draw any lasting conclusions.”

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

OPINION & ANALYSIS

OPINION: Sweden’s ‘historic investment’ has failed to solve the housing crisis

Five years after Sweden's government promised to solve the country's housing crisis with a "historic investment", things are as bad as ever, David Crouch argues. Radical action is needed.

OPINION: Sweden's 'historic investment' has failed to solve the housing crisis

Forced to move house 20 times in the past eight years, Maria’s situation was desperate. She and her daughter had arrived in Stockholm from Latin America in search of a better life. She found work, no problem – but housing was impossible.

“Sometimes I was paying 12,000kr in rent and it was very hard because I only had 15,000kr in monthly salary,” says Maria (not her real name). So she took a high-interest loan of 240,000kr and tried to bribe someone in the Housing Agency to get to the front of the queue for affordable housing.

But she was caught. Her fate is unknown. And she didn’t even get an apartment.

This recent story, in the excellent newspaper of the Tenants’ Association, sums up the problems facing people who move here to work. The market for rental accommodation is tight as a drum. Finding a home means competing with Swedes, but with all the disadvantages of being an outsider. So people find themselves pushed into short-term, insecure rental contracts at inflated prices.

It wasn’t supposed to be this way. Five years ago this month, the government announced a “historic investment in housing”, including subsidies for construction companies, easing restrictions on building permits, and making more land available.

The housing situation at the time was grim. Spotify had threatened to leave Sweden if things didn’t improve – how could the company attract skilled young people to a city where there was nowhere for them to live? More than half Stockholm’s population – 600,000 people – were in the queue for a coveted rental apartment, because strict regulation meant these rents were low. But it took as long as 20 years to get to the front of that queue.

The result was a thriving rental property black market, with large bribes changing hands. Many tenants exploited the situation by sub-letting their homes, or parts of them. “It is almost impossible for immigrants and new arrivals to penetrate this market – it is all about who you know and how much money you have,” said Billy McCormac, head of the Fastighetsägarna property association, in 2015.

READ ALSO: 

So what has been the outcome of the grand promises the government made five years ago? House-building at the time was already rising steadily, and it has continued to do so. Look around you in the big cities and you will see that new apartment blocks have sprung up here and there.

But we shouldn’t go only on appearances. To understand the reality, we need to look at some numbers.

The gap between demand for housing and the existing housing stock has indeed started to shrink. “As housing construction has gradually increased and population growth has begun to slow down, the gap has decreased since 2017,” Stockholm’s Housing Agency noted in December.

The Agency has broken records four years in a row for the number of rental homes it has provided. The proportion of young adults living independently has also increased somewhat, the Tenants’ Association found, probably due to the pace of construction.

But this smidgen of good news is outweighed by an avalanche of bad.

The average queuing time in 2021 for a Stockholm apartment was more than 9 years; for somewhere in the city centre you have to wait 18 years. Only 936 homes came with a waiting time of less than one year. More than three-quarters of a million people are now registered in the queue for housing – a big increase on five years ago.

The rate at which the housing shortage is shrinking is nowhere near fast enough to alleviate the huge accumulated demand.

Assuming that the current pace of construction can be maintained, it will be the end of this decade before any significant dent is made in the deficit of homes, according to Boverket – the Swedish National Board of Housing, Building and Planning. The current rate of construction is “only marginally more than the long-term need”, it says.

The challenge is even greater when it comes to producing affordable housing, Boverket says, especially for the young and those entering the housing market for the first time. Almost one in four young Swedes up to the age of 27 are forced to live at home – the second-highest figure since the measurements began.

There are already signs that housing construction is actually slowing down, owing to higher building material prices, rising interest rates and an incipient labour shortage. Construction prices rose by more than 8 percent last year, and there is concern in the industry that war in Ukraine will further affect costs, in turn slowing the pace of building.

There is another fly in the ointment, a consequence of the collapse of Sweden’s governing coalition in November. The new, minority administration was forced to adopt the opposition’s budget, which halted investment subsidies for house building, throwing the construction industry into confusion.

In short, the “Swedish model” for providing people with a roof over their heads is failing. The folkhemmet, or “people’s home”, has not enough homes for its people.

Swedes themselves understand this: in a survey last month, nine out of ten voters said they thought that politicians did not take the housing shortage seriously.

We have waited too long. It is time for fresh thinking and radical action to solve the housing crisis.

David Crouch is the author of Almost Perfekt: How Sweden Works and What Can We Learn From It. He is a freelance journalist and a lecturer in journalism at Gothenburg University

SHOW COMMENTS