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Home Prices in Sweden Have Been Rising. Here’s Why. 30-Oct-2017

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 Are you planning to sell your property in Sweden fast? 2017 has been a very good year for the Swedish housing market, home prices have risen sharply, thanks to the strong uptick in the economy, low mortgage rates, and fast population growth.

The fast population growth is mainly due to a steady influx of immigrants from poor, third world countries. This has led to a serious housing shortage as the demand for low cost housing is at a high. As a result, the real estate market here has recovered sharply from the 2008 recession. Hope prices have risen by over 50% since then.

The question is whether this is a bubble. Olof Manner, head of research for Swedbank, a leading Stockholm-based financial services group says in an interview with The New York Times, “I don’t think we have a bubble. But it’s very richly priced.”

But there are others who say that the growing home prices, along with the rising population growth have led to a housing crisis in the country.

Bo Söderberg, head of housing market analysis at Boverket, says in an interview with The Local Sweden, "The section of the population that's growing – young people and immigrants – is almost by definition in a poorer economic situation. They have less time in the queue for state or municipal housing, they have less money, and some are unemployed, so by definition their problems can't be solved by building in standard, market-defined terms as we have until now."

The problem has been compounded because of the serious shortage of affordable homes and apartments for lower income groups.

Malmö University's Martin Grander, who has done a lot of research on housing and housing inequality explains in an interview with The Local Sweden, "The truth is probably found somewhere in between. Incremental changes in policies, legislation and development since the 1990s have made it beneficial for households to own their house and for housing constructors to construct a certain type of housing: villa houses and cooperative-owned flats (known as bostadsrätter in Swedish).”

“It has become less beneficial to construct affordable housing meanwhile, and rental apartments, if built, are directed at high income households. The root of the problem is we have a housing system where key ingredients were designed during the post-war era, but are no longer compatible with the current economic landscape," Mr. Grander added.

Another issue with the Swedish property market is the serious shortage of sellers. It is very difficult to find people willing to sell their homes, says Elisabeth Hallberg, who works for a luxury real estate agency in Stockholm. She says, “The problem for the real estate agent is not to find buyers; it’s to find sellers.”

There are a plenty of people willing to buy property in Sweden online. Indeed, most homes for sale have multiple bids. But good luck trying to find sellers! That, in a nutshell, explains the conundrum facing the Swedish real estate market. This is also why home prices have been rising steadily in Sweden, going up by 7 percent in 2017.