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STOCKHOLM'S HOUSING HELL

HOUSING

‘Stockholm’s like a party with a $500 coat check’

Stockholm may be "the next big thing" on the world's start-up scene, but eager workers are turning up their noses due to the acute housing shortage. The Local chats to housing and start-up experts Billy McCormac and Tyler Crowley.

'Stockholm's like a party with a $500 coat check'
Handshake photo: Shutterstock.

"I had 13 different apartments in the first ten years I lived here," says Billy McCormac, the head of the Stockholm branch of the Swedish Property Federation (Fastighetsägarna).

"It got to a point where I thought 'Why put the stuff in the drawers any more, I may as well keep it in suitcase'," the US immigrant adds with a wry chuckle.

But the housing crisis is no laughing matter. In Stockholm, renters wait an average of 7.5 years for a "first-hand contract", while in the meantime enduring years living with fewer rights as a sub-letting tenant. The queues and housing shortages have fanned the flames of a thriving black market, on which house hunters pay large sums of cash to skip the official queues.

The situation is a particular headache for people trying to recruit talent from abroad to join their start-up companies. McCormac fears that it will be too tough for Stockholm to produce more companies like Spotify and Klarna if new workers can't find a place to call home.

One man who's no stranger to housing hell is Los Angeles-native Tyler Crowley, known by some as the "start-up whisperer". Crowley, who organizes networking events for tech-interested Stockholmers and has dubbed the city "the tech world's hidden nightclub", tells The Local that Stockholm risks its potential tech success due to the housing situation.

"Stockholm is like a party with a $500 coat check. It's shaping up to be the next super hot start-up centre. All the goods are here. We have the best drinks, the best DJ… we have it all, but if you're not able to participate then what good is it?" he said on Thursday. 

Crowley’s personal experience of the Stockholm housing situation has left him in no doubt that Stockholm is in a class of its own in this regard.

"It's bad. It's stunningly bad. This might be the hardest city in the world to get an apartment," he says. "Someone should commission a report, I think they could actually prove it."

On Thursday morning, Billy McCormac hosted a seminar in central Stockholm tackling the issue. Armed with fresh research from the federation, a trade organization representing the interests of private property owners in Sweden, he interviewed a panel including a Stockholm city councillor, Crowley himself, and a young entrepreneur considering seeking greener pastures in Barcelona.

"When I read Enrico Moretti's The New Geography of Jobs it opened my eyes," McCormac explains. "The people in the first IT bubble said that geography doesn't mean anything – that you could work anywhere. Now its the opposite, geography means everything."

The problem, he says, is that politicians on a local and national level prefer to shun the issue rather than respond, preventing a start-up cluster that cities like Berlin and San Francisco are enjoying.

"We want to show that everyone wins when politics is more responsive. It should be 'what can we do for you to make life easier?'. We are seeing cities that are really quite good at that, like London, where their approach is 'Tell us what you want and we'll make it happen'."

But Stockholm politicians, two of whom were on the scene on Thursday, can't do much more than acknowledge the problem. McCormac said that both city councillor Ulla Hamilton and Maria Östberg Svanelid of the Social Democrats "could have been more emphatic" during the discussion, but he realizes that in election years it's often tough to expect much more than promises.

And with nothing more than promises, he fears that he will hear more tales of people who choose London, Berlin, or San Francisco over Stockholm due to the horror housing stories they've heard.

Tyler Crowley concurs, arguing that Stockholm has a "surprisingly lazy" approach to the tech scene in general, adding that other cities "would do anything" for the resources that Stockholm has in terms of talent.

"I'm obviously very biased, but to me technology is where the future is going. I am not alone with that idea … the prime minister of the UK agrees with that. Some world leaders agree. It's not a crazy idea that technology is where countries need to be focused going forward," he adds.

He says it would be "sad" if Stockholm didn't address the housing shortage and seize this opportunity, especially when other countries were striving so hard for what Stockholm already has.

“A million-people city is not that big. It shouldn't be that hard," he adds.

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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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