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PROPERTY

Why are one fifth of Swedish properties selling for below asking price?

Across Sweden, almost one in five properties sold below asking price in the first two weeks of June - almost as many as in summer 2020, just months after the outbreak of the Covid-19 pandemic.

Why are one fifth of Swedish properties selling for below asking price?
The new figures come from Swedish property site Hemnet. Photo: Fredrik Sandberg/Scanpix/TT

The downturn on the property market in Sweden is perhaps becoming more and more clear, with one in five properties selling under asking price in the beginning of June.

Rising interest rates from the Swedish central bank alongside high inflation is starting to make its mark on apartment and house sales. It’s not just affecting prices, but also leading to a larger number of sellers having to sell for lower than asking price.

Across Sweden, the percentage of sellers selling under asking price in the first two weeks of June amounted to 19.2 percent, according to statistics from property site Hemnet. This is almost as many as in summer 2020 (20.6 percent), when the market was affected by uncertainty over the Covid-19 pandemic.

“It’s a clear change,” Erik Holmberg, analyst at Hemnet, told TT newswire.

“The main factor is a market which is changing, and if we compare this to a year ago it’s a significant difference, where it’s become a buyer’s market.”

Record-high asking prices

Holmberg also said that in this type of situation, many who are looking to sell their home adopt a different strategy.

“We’ve seen record-high asking prices. Historically, it’s been the case that when the market becomes more cautious, there’s a tendency to put property on the market at a high asking price,” he said.

There are also clear regional differences. In inner-city Stockholm, where some of Sweden’s most expensive apartments per square metre are located, prices have dropped by almost exactly a fifth (20.1 percent). Last year prices in this area dropped by 4.7 percent, with a 12 percent drop in 2020 and a 9.9 percent drop in 2019.

Jakob Jakobssen, an estate agent at Widerlöv Stockholm, has almost 14 years’ experience in the property branch. He agreed that the situation has changed noticeably over the last six weeks.

“In general, I can say that buyers are more cautious and careful,” he told TT. “There’s a very low interest in advance viewings and very few properties are sold before viewing. Buyers want a more traditional viewing.”

Hard to match buyers with sellers

Another deciding factor is the fact that supply has increased drastically from the lower level seen around the beginning of the year until March. Now, the challenge is matching up buyers and sellers with each other.

“I’ve been an estate agent for a long time and been through downturns, like in autumn 2008 and in 2017, so I think I have the right tools to help buyers and sellers feel secure, but there are lots of newer colleagues in this branch who are having a hard time,” Jakobssen said.

“Maybe they started working when the market was on the up and they’re struggling to understand the situation the market is in right now.”

During the Covid-19 pandemic, different kinds of properties were affected in different ways, with larger apartments selling better than smaller ones. However, this time it’s affecting all properties equally.

“With the effects we have now such as rising index rates, rising inflation and drops on the stock market, it’s affecting all kinds of apartments, whereas during the pandemic, it was affecting different types of apartment in different ways,” he said.

“This is hitting the whole property market hard.”

However, Jakobssen believes the situation will be different after the summer.

“I think there’ll be more sales in August-September than there are now, but at a lower level. Sellers will have learnt by then that there’s been an effect on the market.”

 

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ECONOMY

Inflation rate dips in Sweden for first time in seven months

The inflation rate in Sweden fell in July for the first time in seven months, according to official data from Statistics Sweden (SCB), indicating that rate rises may be having an impact on rising prices.

Inflation rate dips in Sweden for first time in seven months

“Lower prices for electricity and fuel contributed to the inflation rate sinking for the first time since January,” said Carl Mårtensson, a price statistician at the agency, in a press release.

The official inflation rate for July this year was 8 percent, down from 8.5 percent in June, and below the consensus estimate of economists at 8.3 percent.

The fall was almost exclusively the result of falling prices for electricity and fuel, with the price of electricity falling by 8.3 percent month on month and the price of petrol and diesel falling 5.6 percent. Excluding energy prices, the inflation rate rose to 6.6 percent from 6.1 percent in June. 

Olle Holmgren, Chief Strategist at Sweden’s SEB Bank said that while inflation pressure remained high, the numbers were cause for hope. 

“Inflation pressures remains high, but the composition of price changes gives some hope that the strong upward trend could be losing some steam,” he wrote in a comment

He noted that the fall in fuel and electricity prices had been offset by an “extremely strong upturn in food prices”, 13.5 percent year on year. 

Alexandra Stråberg, chief economist at the Länsförsäkringar insurance company, however, said that she did not think that the dip in headline inflation meant that the risk of rising prices was over. 

“Unfortunately, it probably hasn’t turned the corner yet,” she told TT. “This is only a short pause.” 

In the chart below from SCB’s press release you can see how four out of the agency’s inflation indexes have dipped in July, after a year of steady rises. 

The index which excludes energy prices, however, has been rising steadily since December. 

Source: Statistics Sweden
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