Swedish house prices have fallen slightly since the peak in Q1 2010. During 2011 they fell by 2.7% (4.89% in real terms) to an average price of SEK 1,969,000 (€221,316), according to Statistics Sweden
The drop in house prices was partly influenced by the Riksbank’s seven hikes in the key rate since July 2010, to 2% (the rate prevailing between July 2011 and October 2011). These hikes were in response to strong GDP growth in 2011 (3.9% ), and high lending for house purchases, Since then, because of the slowing economy, the Riksbank’s key rate has been lowered to 1.50%.
It is likely that house prices in Sweden will slide or at best at best be stable in 2012, according to Riksbank Central Bank Governor Stefan Ingves. “The pace of lending is significantly lower now than before and we have a generally weaker economic development,” says Ingves.
- In Greater Stockholm, average house prices fell by 4.4% during 2011 (-6.6% in real terms) to SEK 3,643,000 (€409,473), with a large fall in the last quarter when prices fell 7.9% (-8.6% in real terms).
- Regions with large house price declines included Södermanland, which experienced a 8.94% decline during 2011, followed by Värmland and Östergötland with 8.6% and 7.4% price falls, respectively.
- Västerbotten had the highest house price increase among Swedish regions in 2011, at 4.4%. Gotland (3.5% rise) and Uppsala (2.8% rise) also had decent house price increases.
The drop in house prices was partly influenced by the Riksbank’s seven hikes in the key rate since July 2010, to 2% (the rate prevailing between July 2011 and October 2011). These hikes were in response to strong GDP growth in 2011 (3.9% ), and high lending for house purchases, Since then, because of the slowing economy, the Riksbank’s key rate has been lowered to 1.50%.It is likely that house prices in Sweden will slide or at best at best be stable in 2012, according to Riksbank Central Bank Governor Stefan Ingves. “The pace of lending is significantly lower now than before and we have a generally weaker economic development,” says Ingves.
Analysis of Sweden Residential Property Market »
RENTAL YIELDS
Last Updated: Sep 30, 2011
Swedish property yields are low to moderate according to Global Property Guide estimates (alas, our yields data has not been updated since September 2005). Mid-sized apartments (80 to 120 sq. m.) have yields at 6 to 7% while other sized properties have yields of around 3 to 4%.Apartments in the second-largest city of Göteborg have yields of around 5% to 7%, while properties in suburban Stockholm have relatively lower yields, at 3% to 5%. Because rents are tied to the age of the property, the higher yields in the city-center reflect newer housing stock in those areas.
TAXES AND COSTS
Last Updated: Aug 10, 2011
Rental Income: Rental income is generally considered as business income and taxed at progressive rates. Income-generating expenses are deductible when computing the taxable income.
Capital Gains: Capital gains tax is levied at a general rate of 30%. Acquisition costs are deductible when computing the taxable gains.
Inheritance: Inheritance tax in Sweden has been abolished since January 2005.
Residents: Residents are taxed on their worldwide income.
Capital Gains: Capital gains tax is levied at a general rate of 30%. Acquisition costs are deductible when computing the taxable gains.
Inheritance: Inheritance tax in Sweden has been abolished since January 2005.
Residents: Residents are taxed on their worldwide income.
BUYING GUIDE
Last Updated: Mar 29, 2007
Closing costs range from 4.5% to 7.5%. The buyer pays stamp duty (1.5%) and registration fee of SEK825 (€88.50). The seller pays the real estate agent’s fee (3% - 5%). When the buyer and the seller reach an agreement, the former pays a deposit ranging from 2% to 10% of the purchase price.
LANDLORD AND TENANT
Last Updated: Nov 15, 2006
Sweden’s rental market is strongly pro-tenant. The system is enormously counter-productive. Eight per cent of the Swedish population is queueing for a new apartment, with an average waiting time of 10 yearsRents: Rents are set far below reasonable returns-on-investment. Rents are little influenced by location, so that metropolitan units are especially under priced. The system is enforced by Rent Tribunals.
Tenant Security: Tenants have a right to prolong their contract, essentially for ever. The rule is totally asymmetric; a tenant may at all times give 3 month’s notice, even if the contract is fixed for a given period, to terminate the agreement.
In September 2006 the Alliance for Sweden, a centre-right coalition headed by Moderate Party leader Fredrik Reinfeldt, unseated the Social Democrat Party of Goran Persson. Since then, the housing system has been high on the agenda. An ongoing state review of the system argues for the removal of the current rental ceiling, so that private housing companies and individuals could set market rents.
ECONOMIC GROWTH
Last Updated: Apr 26, 2012
Sweden’s economic slowdown in 2012
Sweden’s economy grew by 3.9% in 2011, down from 6.1% in 2010. Exports suffered from the unstable international conditions, with only a 0.6% exports increase. Low consumption also contributed to Sweden’s slowdown, with household consumption only rising 0.7% in Q4 2011, while government consumption rose 0.8%.
The government cut its 2012 economic growth forecast to 0.4% due to “problems in the public finances of several euro[zone] countries”, Sweden’s Finance Minister Andres Borg announced. However, growth is expected to pick up the following year, with 3.7% GDP growth in 2013.
Inflation remains below the Riksbank’s 2% target, at 1.9%. Meanwhile, unemployment rose to 7.8% in December 2011. Sweden’s unemployment is likely to peak at 9% next year, according to Danske Bank’s analyst Michael Grahn, paving the way for a Riksbank repo rate reduction to 0.5% this year.
The government cut its 2012 economic growth forecast to 0.4% due to “problems in the public finances of several euro[zone] countries”, Sweden’s Finance Minister Andres Borg announced. However, growth is expected to pick up the following year, with 3.7% GDP growth in 2013.
Inflation remains below the Riksbank’s 2% target, at 1.9%. Meanwhile, unemployment rose to 7.8% in December 2011. Sweden’s unemployment is likely to peak at 9% next year, according to Danske Bank’s analyst Michael Grahn, paving the way for a Riksbank repo rate reduction to 0.5% this year.
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