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One in five flats sold before public viewings

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One in five flats sold before public viewings
One in five apartments in Sweden are sold without public viewings. Photo: Aline Lessner/imagebank.sweden.se
12:47 CEST+02:00
Sweden's booming housing market has led to a trend in city apartments being sold to hand-picked customers rather than following open house public viewings, which are the norm in the Nordic nation.
Rising prices and high demand for apartments in Sweden's three largest cities is leading to growing numbers of properties being sold without public viewings, according to a survey carried out by SBAB, the nation's state-owned mortgage broker.
 
Public and private brokers in Gothenburg, Malmö and Stockholm were asked to estimate how common it was for flats to get bought without going to auction.
 
The results suggest that one in five apartments across those areas are now sold without a public bidding process, rising to almost one in four in the Swedish capital.
 
Tor Borg, chief economist at SBAB told The Local: "Things are definitely changing. Of course some properties have always sold before auction but those were usually grander places with a specific kind of customer. Now it is more like 20 percent of properties. I don't remember the figure ever being that high before".
 
"This tells us that the market is really, really hot right now as there is a lot of demand and not very much supply," he added.
 
The study suggests that the trend is less common among those buying and selling whole houses but that more than one in ten of these kinds of properties across the major cities are exchanging hands without an auction.
 
In Sweden, homes are typically bought and sold after potential customers attend an open house viewing and then submit their bids for the property via text. Bidders usually need to be able to offer a deposit of at least 15 percent.
 
The shift brings Sweden closer to the approach favoured in other European countries such as the UK, where customers in property hotspots such as London or Brighton are often granted private viewings and can have their offers accepted by sellers before properties are even measured or photographed by estate agents.
 
 
SBAB says that while homeowners and buyers may benefit from a simple and fast transaction, sellers may end up making less money than they could have got at auction, while buyers could risk paying over the odds for a property that may not have reached the same price via public bidding.
 
Borg told The Local that his main advice for customers is to "keep your head calm and don't get engaged in offering a price that you cannot afford, however you are buying".
 
Many customers are attempting to buy and sell properties quickly in Sweden ahead of new mortgage rules which come into force in August.
 
Unlike in many countries, Swedish homeowners commonly never repay the full amount of money they borrow from banks or building societies, with many only paying off the interest earned.
 
Later this year, all buyers will be asked to repay back two percent of the total they have borrowed, plus interest, in a move designed to help stabilize the country's economy by reducing household debt.
 
The new strategy was put forward by Sweden's financial watchdog Finansinspektionen (FI) which sets the rules and regulations followed by mortgage brokers in Sweden.
 
On average, Swedes with mortgages currently hold a debt 3.7 times higher than their annual income. 
 
A study by Sweden's central bank in 2014 suggested that most Swedes with mortgages would die before repaying their debts.
 
But besides mortgages, which account for 95 percent of their debt, Swedes are not big borrowers.
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