SHARE
COPY LINK
For members

PROPERTY

What will happen to Sweden’s property market in 2021?

Even a pandemic was not enough to stop rising property prices in Sweden last year, but can the increases continue? Here's what some of the experts say.

What will happen to Sweden's property market in 2021?
Country cabins, like this one in the Stockholm archipelago, soared in price in 2020. Photo: Janerik Henriksson/TT

What kept property prices high in Sweden in 2020? 

You might think that a crisis that pushed unemployment to a 23-year high, with half a million people out of work, would depress property prices. 

But the property market in Sweden boomed in 2020. According to the property industry's own price reporting service, Svensk Mäklarstatistik, the total sale value of all the apartments and houses in Sweden rose 14 percent in 2020 to 510 billion Swedish kronor (approximately $60.8 billion).

“We saw a surprisingly resilient market, not only in Sweden but in most countries. We saw quite significant rises,” Andreas Wallström, head of forecasting at Swedbank, told The Local. 

He put down the rise to consumers' belief that mortgage rates were set to fall, which surveys say became more widespread over the year. 

As for unemployment, he argued that the property market has been spared because the people who lost their jobs largely weren't those who normally buy houses. 

“There was a lot of discussion that this crisis as such and increased unemployment would weigh on prices. In my view, this is actually not too important, because typically, those who become unemployed are people who already do not really have a strong foothold in the market and have problems getting loans.” 

Johan Nordenfelt, information chief at estate agents Erik Olsson, agreed.

“Most of those who have so far lost their jobs have been in the service sector and many of them already struggle to enter the property market,” he told the Dagens Nyheter newspaper. 

“At the same time, others have been encouraged that interest rates will remain low in the future, which makes them feel safe and comfortable with paying a lot for a property.” 

The government's decision on April 14th to suspend obligatory amortisation on mortgages has also helped prop up prices. 

READ ALSO: 

What sorts of properties saw the biggest rises? 

Estate agents of Sweden talk of a 'pandemic effect', which has meant that the price of larger detached houses and country cabins has risen faster than the price of apartments.

An increase in home-working, they argue, has meant that people have begun to value having an extra room more than a shorter travel time to their workplace, while travel constraints as a result of the pandemic led to a rush to buy country getaways. 

The price of detached houses rose by 13 percent in 2020, and of fritidshus or 'country cabins' rose by 12 percent, while the price of apartments (bostadsrätter) rose by 7 percent. 

Some 57,000 detached houses were sold in 2020, 1,000 more than the previous year. A record 120,000 apartments were sold during the year.

Will rising prices continue into 2021? 

Most estate agents and analysts believe they will, although they expect the rate of growth to slow. 

“The trend is going to continue and we will continue to see a stable housing market. I don't expect we are going to see double figures, but I believe more in price rises than price falls for 2021,” Jens Magnusson, an economist at the SEB bank, told the TT newswire.  

Liza Nyberg, chief executive for the estate agents Svensk fastighetsförmedling, told TT she expected growth of 4 percent to 5 percent a year in 2021, although the “exceptional” growth in 2020 would not be repeated.

Hans Flink, from Svensk mäklarstatistik, agreed.

“I don't believe we'll see the same rises as this year,” he told TT. “There's going to be some saturation: it's not reasonable when we're scarcely going to have any wage increases at all. We can't have more and more expensive outgoings without higher intake.”

Wallström told The Local he expected global interest rates to start to increase over the year.

“We could see, I think, a pick-up in global interest rates over the course of this year, due to the recovery of the economy, and also perhaps inflation will pick up a bit. But this increase will still be very muted, so in my view it's very hard to see a significant pick-up in mortgage rates even in the longer duration.”


Detached houses like these ones in Ekerö outside Stockholm have risen in price faster than city centre apartments. Photo: Fredrik Sandberg/TT

Will the 'pandemic effect' continue?

The experts are divided.

Nordenfelt said that the effect would continue, leading prices to rise faster in areas with a slightly longer commute.

“I think that the connection between the value of a property and the travel time to big employers will become weaker now many people do not travel to their work place so often. Digitalisation can make more areas attractive, because it is less important how close you live to your job.”

He thinks this will mean prices rise faster for larger properties, with more people willing to trade a more central location for an extra room somewhere further from the city.

Flink said he expected what he called a “mini green wave” – a scaled down repeat of the 1970s 'green wave' phenomenon, when many young, middle-class families moved from the city to the countryside to be closer to nature.

“Many people will continue to have the opportunity of working from home, which means that travel time will not be such a big problem,” he argued.

Magnusson at SEB said he was sceptical of this idea: “Even though a lot of people have discovered the advantages of working from home, a lot of people have seen the disadvantages too.”

Nyberg said she expected an end to the sharply rising prices for country cabins seen in 2020.

“I'm uncertain about how the market for fritidshus will develop. Even if flygskam, ['flight shame'], is still around, many are longing for new environments. If we can start travelling again, that will will the priority and that will bring consequences. It was the lack of travel that led to the development of the market in country cabins.”

Will obligatory interest rate payments return?

When Sweden's Financial Supervisory Authority suspended obligatory interest rate payments last April, it said that the suspension would last until August 2021. Erik Thedéen, the authority's director, has since said repeatedly that his intention remains to reinstate obligatory payments in August.

If the economy is facing a crisis, however, he has said that the suspension could be extended, promising to take a final decision before the end of April.

“I think that it's coming back sooner or later, but not if the major economic concerns and the pandemic itself have not yet worn off,” said Robert Boije, chief economist at SBAB bank.

What will prop up prices?

Wallström said that the fundamentals of the Swedish housing market still pointed to rising prices, pandemic or no pandemic.

“The Swedish housing market is still dysfunctional,” he said. “We have high demand due to strong population growth, a dysfunctional rental market, so that means that the demand for actually buying houses or apartments continues to be high.

“And meanwhile, the supplies aren't increasing that much because of regulation. Construction is expected to still be quite low. So, we have those fundamental factors supporting prices.”

What could lead to falling prices?

Most of the experts believed that a rise in interest rates of more than a quarter of a percentage point was unlikely, although if such a rise happened it might cause prices to fall.

Another risk to property prices, they argued, would be a renewed rise in unemployment, perhaps as a result of the government's financial support packages coming to an end.

If something were to go wrong with the coronavirus vaccine, or if a new mutation of the virus was immune to it, that could lead to a more serious economic crisis which might lead prices to fall.

“Could the housing market withstand yet another round?” Magnusson asked.

Member comments

  1. What is this interest rate suspension? Am I, as a home owner, entitled to have my interest rates suspended? Never heard about this before. I heard about not enforcing amortization, which is something completely different.

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

CRIME

EXPLAINED: What happens when a foreigner gets arrested in Sweden?

It’s a situation nobody ever wants to be in, but what happens if you’re arrested in Sweden? What should you do, and what are your rights?

EXPLAINED: What happens when a foreigner gets arrested in Sweden?

Most of the people who come to Sweden to work, join a Swedish partner, or start a new life are law-abiding folk. Hardly anyone comes with the intention of breaking the law.  But from time to time, due to an accident of fortune or poor decision-making, foreigners end up on the wrong end of the law. 

Pray it never happens but if you are arrested in Sweden, what are your rights? What happens next, and who can help you? 

Whether it’s a traffic accident, misunderstanding, or murder charge, Swedish law follows certain processes upon arrest. 

The first stages 

The first stage of a police investigation is the anmälan, or report. Anyone can report you for committing a crime, regardless of whether they are the victim. The tax agency, for instance, can report you for fraud. If the police catch you doing something illegal, the officer can file a report themselves. 

After the report is registered, someone is appointed to lead the preliminary investigation — a so-called förundersökningsledare or “investigation leader”. The förundersökningsledare can be either a police officer or a prosecutor, depending on how serious the crime is. 

The förundersökningsledare then decides if there is sufficient reason to suspect that you have committed a crime.

There are two grades of suspicion. The lowest level is skäligen misstänkt or “reasonable suspicion”, which means that there are “circumstances which with a certain strength indicate that you have committed the act.  The next level up is på sannolika skäl, or “on probable cause”, that you have committed the act. 

When can you get arrested? 

If the förundersökningsledare has declared you a suspect, a police officer might be sent to arrest you. A police officer can also arrest you on their own initiative if they think that there is a reasonable suspicion that a crime has been committed. 

All it takes to arrest someone in Sweden is for the officer to say “du är gripen“, meaning “you are under arrest”. If you resist,  the officer is permitted to employ as much violence as necessary to get you to the police station. 

If a member of the public observes you committing a crime serious enough to warrant a prison sentence, they are also allowed to arrest you, either while you are committing the crime or fleeing the scene. A member of the public is also allowed to arrest anyone wanted by the police for a crime. 

Not everyone suspected of committing a crime is necessarily arrested. If there is no danger to the public, no risk of you tampering with evidence, and no risk that you might flee, then police can decide to leave you free until you are asked to appear for interview or in court. 

When you are arrested, police will search you for any weapons, drugs or suspicious goods, and may take your telephone if it could contain evidence of a crime, but they will otherwise leave you with your belongings. 

What happens after your arrest? 

If you have been arrested by a police officer who had a reasonable suspicion that you have committed a crime, you need to have a formal interview or förhör at the police station as soon as possible. Police may also interview the person who reported you, your alleged victim (the målsägande, which literally means “case owner”), and any witnesses. 

You can only be held at the police station for a maximum of 12 hours before a prosecutor decides whether there is sufficient reason for you to be anhållan, or “held”.  If they decide there is not, then you need to be released. 

If you are held, then you are taken to a cell, where you can be held for a maximum of three days, before which the prosecutor needs to either release you or request that you be häktad, or placed in pre-trial custody. 

When the decision is made to “hold” you, your personal belongings — phone, wallet, keys, etc — are taken from you and stored.

To be placed in pre-trial custody, you have to have committed a crime that can potentially lead to at least one year in prison. The prosecutor must also demonstrate that there is a risk you will tamper with the evidence or flee.

The decision to hold someone in pre-trial custody needs to be made by a judge at a so-called häktningsförhandling, or “detention hearing”. Unlike a full trial, this hearing is decided by a single judge. 

When can you get a defence lawyer? 

You can ask for a defence lawyer as soon as you are arrested. You can request one by name, or request a specific law firm, or, if you don’t know of any specific defence lawyers, just ask the court to appoint one for you. The court can normally contact the lawyer within a few hours, meaning you should ideally have a defence lawyer with you in your first police interview. 

When can you contact your embassy or family? 

The Swedish authorities are legally obliged to inform national embassies of the arrest of one of their citizens, and will normally do so themselves automatically, according to the British Embassy’s guideIf they do not do so, you can request that they do. 

You can ask the police at any time if you want to make a telephone call, but unlike in the UK or US, you have no right to make a phone call. It is up to the discretion of the prosecutor whether to allow you one, and very often they deny it. 

Most embassies have an urgent number people who are arrested can call. The UK’s line is +46 (0) 8 671 30 00 / +44 1908 51 6666, France’s is 0851992349, Germany’s is +46708529420. 

In practice, it is much better to ask your defence lawyer to contact your embassy, or to request that you can make a phone call. 

Friends and relatives of people who have been arrested can also contact their embassy for them, so that the embassy can find out where they are being held and any details of the suspicions against them. 

What can your embassy do? 

Most European embassies will work with defence lawyers to ensure that their citizens are treated well. 

“The Embassy provides impartial, non-judgemental assistance to British citizens who have been arrested or are in jail in Sweden,” a UK embassy spokesperson told The Local. We aim to make sure they are treated properly in line with Swedish regulations, and no less favourably than other prisoners.”

The first stage of this is a consular visit, which most European embassies generally aim to make within about 24 hours of being notified of your arrest. 

If you request it, your embassy will normally be able to inform your next-of-kin in your home country of your arrest. 

Unless you request otherwise, most embassies will also keep the fact that you have been detained and what the charges are confidential. 

How long can I be held before my trial? 

Perhaps the most criticised aspect of the Swedish justice system is the length that suspects can be held in pretrial detention, while the police and prosecutor carry out their investigations. The system has been criticised by the  United Nations Committee Against Torture, the Council of Europe.

The only limit is that Sweden’s Supreme Court has held that the detention must be reasonably proportional in relation to what may be gained from it (NJA 2015 s. 261) and the injury to the defendant.

In theory, there is no limit to the length of time a suspect can be held in pre-trial detention, so long as the custody is extended by a judge every 14 days. So far the record is a little over four years or being held without trial, and suspects are frequently held for over a year before a court rules on their case. 

There is no bail system in Sweden. 

What restrictions can I be under while in pre-trial detention? 

Prosecutors in Sweden often impose restrictions on those in pre-trial detention on the grounds that otherwise the defendant might change their story or tamper with the evidence. Critics often accuse police of imposing excessive restrictions to break suspects, pushing them to give details of the crime to reduce the time until their trial. 

Restrictions might include stopping suspects from being able to: 

  • receive or send letters without them first being inspected by the prosecutor
  • receive visits without special permission from the prosecutor
  • receive or make phone calls without special permission from the prosecutor
  • watch TV, listen to the radio and read newspapers
  • interact with other inmates

You always have the right to contact your lawyer, a member of consular staff (in special circumstances you may be allowed contact with family). You can also see a priest or other representative of a religious order.  

When will I go to trial? 

When the prosecutor has amassed enough evidence that they feel that there is sufficient evidence to prosecute, they will issue an åtal, or prosecution document, after which the court will set a date for the trial. 

Prosecutors will only do this if they judge that there is tillräckliga skäl för att väcka åtal, “sufficient cause for laying charges”. If they do not, the will end the investigation without laying charges, at which point you must be released. 

SHOW COMMENTS