When will property prices in Sweden start to increase again?
Sweden’s property market has slowed down over the last two years, with homes taking longer to sell and selling for less when they eventually do change hands. Are things going to improve in 2024?
Ever-rising mortgage rates over the last two years have meant that properties for sale in 2022 and 2023 were on the market for longer, pushing down prices.
Add to this the fact that there were - and still are - a large number of homes for sale compared to previous years, and it’s understandable that prices are still staying low.
Could things be about to change? More people believe that interest rates have peaked, and the number of houses sold in December increased by 8 percent compared with the previous three months, according to an article in Swedne's TT newswire.
Unfortunately, experts don't believe there's cause to celebrate just yet. Despite the good signs mentioned above, Tor Berg, the head analyst at the property reseasrch firm Byggfakta, believes that things may remain slow on the property market until at least the first half of this year, and that it’s not necessarily a given that interest rates won’t rise again.
“A lot can change,” he told TT. “Inflation hasn’t come down to 2 percent yet, so I’m not convinced that interest rates will drop.”
At the same time, asking prices for many properties continue to drop, and the rate of turnover on the market is still decreasing, he added.
“All of this is indicating that it’s difficult to see prices starting to rise in the short term,” he said.
Borg believes that it may take anywhere from six months to a year before we start seeing prices go up, with the precondition that interest rates need to be lower first.
Fewer new properties being built
One factor which could push up prices is the fact that there aren’t as many newly built properties coming on to the market, according to Stellan Lundström, professor of building economics at the Royal Institute for Technology (KTH). Any changes will first become apparent in apartment or housing cooperative (bostadsrätt) prices, rather than house prices, he believes.
“[The market for bostadsrätter] is more volatile and changes faster,” he said.
Property researcher Martin Grander from Malmö University agrees that the chances of property prices going up in the short term is unlikely, and if it does happen, it will be nothing more than a stabilisation or a slight increase.
“Even if mortgage rates have peaked, many households are still going to have tough financial situations for some time,” he said.
Grander believes it’s more realistic to expect to wait until 2025 for property prices to increase.
People who already own properties will benefit most
When property prices start to go up again, the real winners will be those who already own their own homes, the experts predict, although banks and estate agents also stand to benefit.
“Generally speaking, the mortgage market grows if prices go up, so the banks win if property prices go up,” Borg said.
People trying to get their foot on the property ladder - people who have only recently moved to Sweden, for example - will lose out, and this could make polarisation on the property market even worse, Grander believes.
“There is a large group of people who are more affected by a recession who will not be able to get onto the property market, even less so when prices start going up again. This will make the market even more polarised than it already is,” he said.
Comments
See Also
Ever-rising mortgage rates over the last two years have meant that properties for sale in 2022 and 2023 were on the market for longer, pushing down prices.
Add to this the fact that there were - and still are - a large number of homes for sale compared to previous years, and it’s understandable that prices are still staying low.
Could things be about to change? More people believe that interest rates have peaked, and the number of houses sold in December increased by 8 percent compared with the previous three months, according to an article in Swedne's TT newswire.
Unfortunately, experts don't believe there's cause to celebrate just yet. Despite the good signs mentioned above, Tor Berg, the head analyst at the property reseasrch firm Byggfakta, believes that things may remain slow on the property market until at least the first half of this year, and that it’s not necessarily a given that interest rates won’t rise again.
“A lot can change,” he told TT. “Inflation hasn’t come down to 2 percent yet, so I’m not convinced that interest rates will drop.”
At the same time, asking prices for many properties continue to drop, and the rate of turnover on the market is still decreasing, he added.
“All of this is indicating that it’s difficult to see prices starting to rise in the short term,” he said.
Borg believes that it may take anywhere from six months to a year before we start seeing prices go up, with the precondition that interest rates need to be lower first.
Fewer new properties being built
One factor which could push up prices is the fact that there aren’t as many newly built properties coming on to the market, according to Stellan Lundström, professor of building economics at the Royal Institute for Technology (KTH). Any changes will first become apparent in apartment or housing cooperative (bostadsrätt) prices, rather than house prices, he believes.
“[The market for bostadsrätter] is more volatile and changes faster,” he said.
Property researcher Martin Grander from Malmö University agrees that the chances of property prices going up in the short term is unlikely, and if it does happen, it will be nothing more than a stabilisation or a slight increase.
“Even if mortgage rates have peaked, many households are still going to have tough financial situations for some time,” he said.
Grander believes it’s more realistic to expect to wait until 2025 for property prices to increase.
People who already own properties will benefit most
When property prices start to go up again, the real winners will be those who already own their own homes, the experts predict, although banks and estate agents also stand to benefit.
“Generally speaking, the mortgage market grows if prices go up, so the banks win if property prices go up,” Borg said.
People trying to get their foot on the property ladder - people who have only recently moved to Sweden, for example - will lose out, and this could make polarisation on the property market even worse, Grander believes.
“There is a large group of people who are more affected by a recession who will not be able to get onto the property market, even less so when prices start going up again. This will make the market even more polarised than it already is,” he said.
Join the conversation in our comments section below. Share your own views and experience and if you have a question or suggestion for our journalists then email us at [email protected].
Please keep comments civil, constructive and on topic – and make sure to read our terms of use before getting involved.
Please log in here to leave a comment.