Market in Depth

Sweden National HPI surges

Lalaine C. Delmendo | February 16, 2022

Sweden's national house price index surged 16.7% (14.4% inflation-adjusted) during 2021.  This is a sharp acceleration from y-o-y rises of 6.6% in 2020 and 2.7% in 2019, according to Statistics Sweden, as the impact of stricter mortgage requirements waned and economic activity gradually returned to pre-pandemic levels. It was the country's biggest house price growth since 1989.

“One explanation for the price increases among single-family homes is the changes in demand that occurred during the pandemic, for example the need of more living space because of increased working from home and the sharp drop in travelling abroad,” said the Swedish Bankers' Association.

Another reason is low interest rates. In February 2022, the Riksbank held its policy rate unchanged at zero, following a quarter point rate hike in December 2019 that effectively ended five years of negative interest rates. It is one of the lowest benchmark interest rates in the world.

By region:
  • Greater Stockholm house price index rose by 18.6% y-o-y in 2021 (16.3% inflation-adjusted), a sharp improvement from the annual increases of 6.3% in 2020 and 0.5% in 2019, based on figures from the Statistics Sweden. It was the highest growth seen in the region since 2000.
  • Greater Göteborg house prices soared 15.7% during 2021 (13.4% inflation-adjusted), following y-o-y increases of 5.1% in 2020 and 3.1% in 2019. It was the region's best showing in 32 years.
  • Greater Malmo house prices surged 18.6% during 2021 (16.3% inflation-adjusted), a sharp acceleration from y-o-y rises of 8.1% in 2020 and 4.3% in 2019 and its biggest growth since 1989 when prices rose by 24.2%.

“After the outbreak of the pandemic in 2020, there was considerable uncertainty on the housing market. Following the introduction of measures by the authorities to reduce the effects of the pandemic, this uncertainty decreased and was instead replaced by significant price increases, in particular among single-family homes,” the Swedish Bankers' Association noted.

“The housing and construction market was more resilient than many observers had expected, and demand for single-family homes and larger apartments increased instead during the pandemic with many people working from home,” the Swedish Bankers' Association added.

Sweden's housing market is expected to remain buoyant this year. “JLL continues to observe a robust market and predicts that transaction activity will remain high in 2022, supported by good access to capital and favourable credit terms,” said JLL.

Sweden's economy grew by about 4.9% during 2021, fully offsetting the 2.9% contraction in 2020, according to the Ministry of Finance, thanks to higher inventory investments, increasing exports and household consumption. The country's GDP is now at a higher level than before the Covid-19 pandemic.

Sweden house prices
During Sweden's recent housing boom (2012-2021) house prices surged by almost 90% (70.8% inflation-adjusted). Over the past two decades house prices have risen by a whopping 260% (178% inflation-adjusted).

Yet recently the Ministry of Finance downgraded its 2022 growth forecast to 3.1%, 0.3 percentage points lower then earlier projections, due to the Ukraine crisis. The European Commission and the IMF are more optimistic, with growth forecasts for Sweden at 3.8% and 3.4%, respectively.

Analysis of Sweden Residential Property Market »

Rental Yields

Yields are moderate in Stockholm, Sweden

Sweden houses for saleSwedish property yields are moderate. This year, we were unable to get yields figures because rents were hard to get in sufficient quantity to be reliable. When we surveyed them last year, mid-sized central Stockholm apartments (80 to 120 sq. m.) had the most generous gross yields, at 6 to 7%. Other sized properties seemed likely to have lower yields, at around 3 to 4%, and properties in suburban Stockholm also had relatively lower yields, at 3% to 5%, while apartments in the centre of the second-largest city of Gottenburg can yield around 5% to 7%.

Because rents are tied to the age of the property, the higher yields in the city-centre reflect partly the newer housing stock in those areas.

Generally, property prices in Stockholm vary in a range from €6,000 to €7,500 per square metre.

Round trip transaction costs on residential property are quite low in Sweden. See our Sweden residential property transaction costs analysis and Transaction costs in Sweden compared to other countries in Europe

Read Rental Yields »

Taxes and Costs

High rental income taxes and CGT

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 at progressive rates.

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Buying Guide

Transaction costs in Sweden are low

Closing costs range from 7.26% to 9.26%. The buyer pays stamp duty (4.25%) and registration fee of SEK825 (€96). 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.

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Landlord and Tenant

Strictly regulated rental market

Swedish homes for saleSweden’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 years

Rents: 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.

Read Landlord and Tenant »


Swedish economy back at pre-pandemic level, inflation surging

Sweden’s economy grew by about 4.9% during 2021, fully offsetting the 2.9% contraction in 2020, according to the Ministry of Finance.

The country’s GDP is now at a higher level than before the Covid-19 pandemic.

Sweden gdp unemployment
“The recovery has been rapid compared with previous economic downturns and the Swedish economy has done well compared with many other countries in the EU,” said Finance Minister Mikael Damberg. “The fact that we entered the crisis with historically strong public finances has been crucial for the rapid recovery.”

Before the pandemic, the economy had been growing by an annual average of 1.9% from 2009 to 2019, according to the International Monetary Fund (IMF).

The Ministry of Finance downgraded recently its 2022 growth forecast to 3.1%, 0.3 percentage points lower than earlier projections, due to the Ukraine crisis. The European Commission and the IMF more optimistic, with growth forecasts for Sweden at 3.8% and 3.4%, respectively.

Inflation accelerated to 6% in March 2022, according to Statistics Sweden, sharply up from 1.7% in the previous year and already far above the Riksbank’s 2% inflation target. It was the highest level since 1991.

Sweden exchange rate
Unemployment stood at 7.9% in February 2022, down from 9.7% in the previous year, according to Statistics Sweden. Nationwide unemployment averaged 7.5% from 2009 to 2019 before rising to 8.3% in 2020 and to 8.9% in 2021.

The country’s public finances are improving again. In 2021, the general government finance deficit fell sharply to 0.2% of GDP, down from a shortfall of 2.7% of GDP in 2020. Yet it remains lower than the surpluses of 0.6% of GDP in 2019, 0.8% in 2018, 1.4% in 2017, and 1% in 2016.

As a percent of GDP, Sweden’s gross public debt dropped to 36.7% in 2021, from 39.6% in 2020. It is among the lowest in the European Union.