Sweden's Residential Property Market Analysis 2025

Sweden’s housing market is in continued recovery, marked by increasing house prices, primarily fueled by renewed property demand as interest rates decrease. However, the prevailing weak overall economic conditions in the country constrain a more robust rebound.

This extended overview from Global Property Guide covers key aspects of the Swedish housing market and takes a closer look at its most recent developments and long-term trends.

Table of Contents

Housing Market Snapshot


In the first quarter of 2025, the national house price index rose by a modest 2.86% as compared to the same period last year, following year-on-year increases of 2.07% in Q4 2024 and 1.51% in Q3 and price declines of 0.22% in Q2 and 2.78% in Q1, based on figures from Statistics Sweden.

Prior to this, Sweden saw seven consecutive quarters of year-on-year house price falls from Q4 2022 to Q2 2024 - the country's worst housing market downturn since 1993.

When adjusted for inflation, house prices registered a 1.95% growth during the year to Q1 2025 - its best showing since Q1 2022.

Sweden's house price annual change:

Data Source: European Central Bank (ECB).

Yet, quarter-on-quarter, nationwide house prices fell slightly by 0.11% (-0.34% inflation-adjusted) in Q1 2025.

By region:

  • Greater Stockholm house price index increased by 2.3% in Q1 2025 from a year earlier (1.4% inflation-adjusted), following year-on-year increases of 1.9% in Q4 2024 and 0.2% in Q3 and annual price falls of 1% in Q2 and 2.7% in Q1, according to Statistics Sweden. Quarter-on-quarter, prices were down by 1.2% (1.4% inflation-adjusted) during the latest quarter.
  • Greater Göteborg house prices were up by 4% (3.1% inflation-adjusted) in Q1 2025 from the previous year, after increasing by 0.7% in Q4 2024 and 1.4% in Q3 and falling by 1.7% in Q2 and 3.3% in Q1. Quarterly, prices increased by 1.1% (0.9% inflation-adjusted).
  • Greater Malmö house prices rose by 5.3% (4.3 inflation-adjusted) in Q1 2025 compared to the same period last year, following annual growth of 7.9% in Q4 2024, 2% in Q3, and 3.2% in Q2, and a price decrease of 1.6% in Q1. Though quarterly, house prices fell by 1.7% (-1.9% inflation-adjusted) in Q1 2025.

Sweden House Price Annual Change graph

Demand is noticeably improving, amidst declining interest rates. During 2024, nationwide home sales rose by 13.2% to 52,797 units as compared to a year earlier, in contrast to annual declines of 16.8% in 2023 and 7% in 2022, according to Statistics Sweden. Then, in Q1 2025, the total number of home sales in the country increased further by 14.6% to 11,557 units as compared to the same period last year.

The housing market's rebound is projected to extend well into 2025. Most forecasts predict Swedish property prices will rise by 2% to 5% this year, buoyed by recovering sales activity and improving buyer confidence as interest rates stabilize, despite persistent global economic uncertainty.

The Swedish economy grew by a meager 1% in 2024 from a year earlier, an improvement from a slight contraction of 0.1% in 2023 but still considerably weaker than the expansions of 1.5% in 2022 and 5.9% in 2021. According to Riksbank, global uncertainty has risen due to U.S. trade policies, slowing growth in the U.S., and Europe. In Sweden, household confidence is down, and businesses are becoming more cautious.

In the first quarter of 2025, the economy expanded by minuscule 0.9% from a year earlier, following year-on-year growth of 2.4% in Q4 2024, 1% in Q3, 0.6% in Q2, and zero growth in Q1. Despite recent interest rate cuts, Sweden's economic growth remains sluggish due to the lingering impact of previously high borrowing costs on household consumption, weak industrial output, alongside subdued global demand.

The European Commission expects Sweden's economic performance to remain subdued in the medium term, projecting a real GDP growth of 1.1% this year and 1.9% in 2026. Though the International Monetary Fund (IMF) is more optimistic, projecting Sweden to post an economic growth of 1.9% this year and another 2.2% next year.

Local house price variations

In Q1 2025, all of the eight Riksområden (National Areas) of Sweden saw increasing house prices. RIKS7 Central Norrland registered the biggest year-on-year price growth of 12.17% (11.65% inflation-adjusted) in Q1 2025, based on figures from Statistics Sweden.

It was followed by RIKS5 West Sweden and RIKS3 Småland, with the islands, with house price growth of 6.49% and 6.29%, respectively. Moderate house price increases were seen in RIKS4 South Sweden (5.36%), RIKS6 Northern Central Sweden (5.18%), RIKS2 Eastern Central Sweden (5.13%), RIKS1 Stockholm production county (4.75%), and RIKS8 Upper Norrland (4.28%).

RIKS1 Stockholm production county still had the most expensive housing in Sweden, with an average house price of SEK 6.99 million (EUR637,729) in Q1 2025. Nationwide house prices stood at an average of SEK 4.05 million (EUR369,865) during the latest quarter.

HOUSE PRICES IN SWEDEN'S 8 RIKSOMRÅDEN (NATIONAL AREAS), Q1 2025
National areas Average house prices Y-O-Y change (%)
SEK EUR Nominal Real
RIKS1 Stockholm production county 6,990,000 637,729 4.75 4.26
RIKS2 Eastern Central Sweden 3,465,000 316,128 5.13 4.64
RIKS3 Småland with the islands 2,722,000 248,340 6.29 5.79
RIKS4 South Sweden 3,914,000 357,092 5.36 4.87
RIKS5 West Sweden 4,134,000 377,163 6.49 6.00
RIKS6 Northern Central Sweden 2,396,000 218,598 5.18 4.69
RIKS7 Central Norrland 2,332,000 212,759 12.17 11.65
RIKS8 Upper Norrland 2,585,000 235,841 4.28 3.79
Sources: Statistics Sweden, Global Property Guide

Historic Perspective:


Low risk of real estate bubble but households are still highly indebted

After the sharp decline in Swedish house prices in 2023 and a sluggish housing market in 2024, there is now a low risk of a real estate bubble in Stockholm, according to the 2024 UBS Global Real Estate Bubble Index.

"Between 2009 and 2021, falling mortgage rates boosted demand for owner-occupied homes in Stockholm, causing real housing prices to rise by about 90%, outpacing local incomes and rents. Excessive housing valuations combined with high household debt and variable-rate mortgages turned out to be a dangerous mix. Rising interest rates and a weak local economy caused demand to plummet and triggered a sharp price correction," said the UBS report. "Over the last three years, real prices have fallen by almost 30%. For now, the bubble risk is low, and the correction is losing steam."

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). Because of the decline in house prices in 2022-23, the imbalances have fallen, and there is now a low risk of a real estate bubble.

Despite this, Swedish households are highly indebted. About 65% of households in the country own their homes. Of these, around 77% have a home loan.

"The rate at which lending to households has increased has been high for a long time. However, the economic circumstances of households have changed, and mortgages have been growing more slowly since May 2022. Despite this, households' total indebtedness continues to be high," said the Swedish Financial Services Authority (Finansinspektionen).

Stefan Ingves, who served as Governor of Riksbank from 2006 to 2022, had previously raised concerns about the exceptionally high levels of indebtedness among Swedish households.

"I've persistently, time and time again, said that the debt level in the household sector is just way, way too high and there will be a day of reckoning and eventually rates will go up, and now rates have gone up," said Ingves. "What you see happening now is almost exactly what you would expect to see happening, and that is that households have to pay more and the interest rate sensitivity … is much higher," Ingves added.

High interest rates since 2022 have put additional pressure on indebted households.

"Households that took out a new mortgage and amortized it spent, on average, after interest rate deductions, 18 percent of their disposable income on interest rate and amortization payments. This is an increase of approximately 7 percentage points compared to the years 2017-2021 when interest rates were lower," said Finansinspektionen.

Financial conditions for households saw some betterment in 2024, with mortgage interest rates decreasing and incomes rising modestly.

"During 2024, the conditions for household finances began to improve after several challenging years. The most visible improvement for households that have a mortgage was that the Riksbank started to make cuts to the policy rate after inflation had subsided. As households became more optimistic, housing prices also increased," according to Finansinspektionen's Swedish Mortgage Market report published in April 2025.

Sweden GDP Growth vs House Price Growth graph

Sweden's housing cycle

Sweden experienced a great house price boom starting in the mid-1990s. The boom was set off by low interest rates, rapid economic growth, and a lack of new supply. Mortgage interest rates fell from over 10% in 1996 to less than 5% between 2004 and 2008.

From 1996 to 2007, the Greater Stockholm house price index soared by 217% (119% inflation-adjusted), while Greater Malmö rose by 236% (185% inflation-adjusted), and Greater Gothenburg rose by 202% (156% inflation-adjusted).

There was a pause in 2008 and 2012. But house prices soared again by 45.1% (40.7% inflation-adjusted) from 2012 to 2017. And, after falling marginally in 2018, house prices rose again by a cumulative 32.6% (25.8% inflation-adjusted) from 2019 to 2021.

The housing market slowed sharply again in the succeeding two years, with house prices falling by 10.8% (-23% inflation-adjusted) from Q1 2022 to Q4 2023.

In 2024, the housing market showed some improvements, and house prices started to increase again.

"When inflation and interest rates began to increase in 2022, housing prices decreased significantly. After showing cautious development at the end of 2022 and during 2023, housing prices increased again in 2024 by roughly 5 per cent. However, price levels at the end of 2024 were still lower than they were at their peak in 2022, particularly for single-family homes," said Finansinspektionen.

Sweden Average Price of Houses graph

Government market-cooling measures

Riksbank cooling measures have rapidly succeeded each other, with little impact. From June 2016, mortgage loans of over 50% of the value of the property have had to be amortized (i.e., paid back) at 1% every year, while loans worth over 70% of the property's value must be amortized at 2% annually.

From March 2018, any new housing loan borrowers with housing debts exceeding 4.5 times gross income have been required to amortize at least 1% in addition to the fundamental amortization requirements.

In addition, the Swedish Financial Services Authority has introduced a 25% mortgage risk weighting to tie up bank capital, thus discouraging mortgage lending.

Yet these measures had a trivial effect on the housing market, with house prices rising again after a small decline in 2018.

In April 2020, the Finansinspektionen, the country's financial services authority, introduced a temporary exemption from amortization payments amidst the Covid-19 pandemic, benefiting around 230,000 households. However, the said temporary exemption expired on August 31, 2021.

Then, in 2022, interest rates for housing loans increased sharply, following the central bank's key interest rate hikes in an effort to rein in inflationary pressures. This resulted in a huge decline in property demand, as well as house prices.

"Inflation continued to be high in 2023, and mortgage rates continued to rise. The Swedish economy was in a recession. The atmosphere on the housing market was cautious, and activity was low," said Finansinspektionen in its 2023 Swedish mortgage market report.

"The new borrowers spent on average 10.8 percent of their income on interest payments after interest rate deductions. Every tenth borrower spent at least 17.5 percent of their income on interest payments. This is a clear increase compared to the years up to 2021 and even a continued increase compared to 2022. When we add amortization payments, new mortgagors on average spent almost 18 percent of their income on loan payments," said Finansinspektionen.

As the Riksbank implemented successive policy rate cuts over the past year to stimulate economic activity amidst easing inflation, property demand has notably rebounded. This trend, coupled with slightly improved household financial conditions in 2024, led to increased housing prices and a faster rise in total mortgages, with the average size of new mortgages growing for the first time since 2021.

Despite these positive developments, Daniel Barr, Director General of FI, cautions: "Households have been under heavy pressure the past few years. The situation has eased somewhat, but it is still tough for many households. It is still uncertain how the economy will develop going forward, and households need to allow for a continued high cost of living."

Demand Highlights:


Demand continues to recover

Demand is noticeably improving, amidst declining interest rates. During 2024, nationwide home sales rose by 13.2% to 52,797 units as compared to a year earlier, in contrast to annual declines of 16.8% in 2023 and 7% in 2022, according to Statistics Sweden.

By major region:

  • In Greater Stockholm, home sales increased strongly by 19.2% y-o-y to 8,448 units in 2024, following annual declines of 17.4% in 2023 and 13.5% in 2022.
  • In Greater Göteborg, home sales were up by 14.9% y-o-y to 4,470 units last year, in contrast to annual declines of 15.9% in 2023 and 6.4% in 2022.
  • In Greater Malmö, home sales rose by 17.4% y-o-y to 3,352 units in 2024, following annual contractions of 14.5% in the preceding year and 11.8% in 2022.

RIKS5 West Sweden, RIKS2 Eastern Central Sweden, and RIKS4 South Sweden accounted for more than half of all home sales in 2024.

Then in Q1 2025, the total number of home sales in the country increased further by 14.6% to 11,557 units as compared to the same period last year.

Sweden Home Sales graph

Foreign demand is more or less stable

Nationwide, foreigners owned 37,973 holiday homes in Sweden in 2024, down slightly by 0.5% from a year earlier, according to Statistics Sweden. This followed a minimal growth of 0.3% in 2023 and a slight decline of 0.2% in 2022.

Overall, foreign ownership accounted for about 6% of the total holiday home stock in the country last year.

Yet there are wide local variations in foreign ownership of holiday homes as a percentage of the total stock. Kronoberg had the highest percentage of foreign ownership, at 36.5% during 2024, followed by Värmland at 23.1%, Jönköping at 13.1%, Blekinge at 10.8%, Västra Götaland at 9.8%, and Kalmar at 9.5%.

In contrast, foreign ownership is just less than 1% of the country's stock in Stockholm, Uppsala, Södermanland, Gotland, and Västmanland.

FOREIGN OWNERSHIP OF HOLIDAY HOMES, 2023 & 2024
County Total units Y-O-Y change (%) Share of foreign-owned holiday homes in 2024 (%)
2023 2024
Stockholm 244 291 19.3 0.4
Uppsala 54 59 9.3 0.3
Södermanland 112 113 0.9 0.5
Östergötland 402 413 2.7 1.7
Jönköping 1,851 1,830 -1.1 13.1
Kronoberg 4,533 4,502 -0.7 36.5
Kalmar 3,142 3,113 -0.9 9.5
Gotland 83 92 10.8 0.7
Blekinge 1,504 1,489 -1.0 10.8
Skåne 3,323 3,299 -0.7 7.1
Halland 1,660 1,662 0.1 6.3
Västra Götaland 7,858 7,858 0.0 9.8
Värmland 6,531 6,420 -1.7 23.1
Örebro 421 424 0.7 2.8
Västmanland 47 49 4.3 0.5
Dalarna 1,089 1,126 3.4 2.4
Gävleborg 305 308 1.0 1.1
Västernorrland 592 577 -2.5 2.2
Jämtland 1,927 1,878 -2.5 5.6
Västerbotten 1,361 1,351 -0.7 4.0
Norrbotten 1,141 1,119 -1.9 3.7
TOTAL 38,180 37,973 -0.5 6.0
Source: Statistics Sweden

Norwegians accounted for the largest share of 32.1%, followed by Germans (with a 29.8% share) and Danes (with a 25.3% share).

The continued decline in the value of the Swedish Krona (SEK) against the euro in the past years has made Swedish holiday homes more affordable to foreign investors. From January 2022 to September 2023, the SEK lost 12.5% of its value against the euro.

However, in the past twenty months, the SEK has appreciated by about 8.7%, reaching an average monthly exchange rate of SEK 10.89 = EUR 1 in May 2025.

Sweden Monthly Average Exchange Rate graph

Supply Highlights:


Residential construction activity remains weak

Nationwide, dwelling starts in newly constructed one- to two-dwelling buildings fell again by 14.1% y-o-y to 5,512 units in 2024 and declined by 9.2% to 20,850 units in multi-dwelling buildings, according to Statistics Sweden.

Likewise, dwelling completions in newly constructed one- to two-dwelling buildings plummeted by 45.8% y-o-y to 6,624 units last year and dropped by 26.5% to 39,240 units for multi-dwelling buildings.

By region:

  • In Greater Stockholm, dwelling starts in all newly constructed buildings rose strongly by 19.5% to 9,592 units during 2024, while completions plunged by 18.7% to 13,621 units.
  • In Greater Göteborg, dwelling starts in newly constructed buildings dropped sharply by 39.8% y-o-y to 2,534 units in 2024, and completions fell by 18.9% to 6,308 units.
  • In Greater Malmö, dwelling starts were down by 6.1% to 2,015 units during 2024, while completions increased by a meager 0.7% to 5,174 units.
  • In Sweden, excluding metropolitan areas, dwelling starts fell sharply by 18.5% y-o-y to 12,221 units last year while completions plummeted by 42.2% to 20,761 units.

"The rate of construction started to decline in 2022 after several years with a relatively high construction rate, which peaked in 2021 with a record 68,500 housing starts. The number of housing starts in 2021 was the highest since 1990. Rising inflation and increasing interest rates from 2022 led to a slowdown in construction, followed by a significant drop during 2023 and a continued slowdown in the first half of 2024," said the Swedish Bankers' Association.

During the first quarter of 2025, residential construction activity remains weak. Dwelling starts dropped 15.9% y-o-y to 6,537 units in Q1 2025, while completions plummeted by a huge 63% y-o-y to 6,038 units over the same period.

Sweden Dwellings in Newly Constructed One-to-Two Dwelling Buildings graph

Rental Market:


Rental yields are moderately good

Gross rental yields in Sweden stand at 5.56%, on average, in Q2 2025, from 5.64% in Q3 2024, 5.68% in Q1 2024, and 5.29% in Q3 2023, according to research conducted by the Global Property Guide.

In major cities, in Q2 2025:

  • In Stockholm, apartments offer rental yields ranging from 2.7% to 5.73%, with a city average of 4.23%.
  • Gothenburg's gross rental yields are higher, ranging from 4.61% to 7.11%, with a city average of 4.96%.
  • In Malmö, gross rental yields currently range from 4.23% to 6.77%, with a city average of 6.02%.
  • In Uppsala, apartments offer good rental returns ranging from 5.59% to 8.31%, with a city average of 7.04%.

Rents continue to increase

Before the Covid-19 pandemic, in 2009-2019, rents rose by about 20%, above the inflation, which was about 12%. However, nationwide inflation reached record highs in the past two years, climbing to an average of 8.4% in 2022 and 8.7% in 2023 - more than double the annual average increase in rents of 4.1% over the same period.

Sweden's rent price index:

Data Source: OECD.

During 2024, new rent for dwellings in Sweden increased by 6.1% to an average of SEK7,664 (EUR699) per month, following y-o-y growth of 5.2% in 2023, 3% in 2022, 2.4% in 2021, 2.9% in 2020, 3.4% in 2019, and 2.1% in 2018, based on figures from Statistics Sweden.

By region:

  • In Greater Stockholm, rents for dwellings were up by 5.9% y-o-y to SEK8,612 (EUR786) per month during 2024, following increases of 4.5% in 2023, 2.9% in 2022, and 2.5% in 2021.
  • In Greater Göteborg, dwelling rents increased by 6% y-o-y to SEK7,808 (EUR712) per month, higher than the annual growth of 5.8% in 2023, 3.2% in 2022, and 2.3% in 2021.
  • In Greater Malmö, the average monthly rent for dwellings rose strongly by 7.9% to SEK8,667 (EUR791) per month, following increases of 5.1% in 2023, 3.5% in 2022, and 2.3% in 2021.

Swedish law requires that rent-setting be negotiated between tenant organizations and MHCs or private landlord organizations. Private rents are compared to social housing rents, which leads to rent conformity across tenures.

Sweden Average Dwelling Rents graph

Mortgage Market:


Interest rates for new housing loans falling, following Riksbank's successive policy rate cuts

In May 2025, Riksbank decided to keep its policy rate unchanged at 2.25%, as increased global uncertainty, especially following a shift in U.S. trade policy, has led to market volatility and weaker growth prospects in both the U.S. and Europe. This followed six rate cuts of a cumulative 175 basis points since April 2024.

Sweden's mortgage loan interest rates:

Data Source: Statistics Sweden.

"Uncertainty in the global economy has increased significantly since the change of US president, not least as a result of the new US trade policy. The increased uncertainty has caused large movements in financial markets. Growth prospects have deteriorated in both the United States and Europe. In the US economy, increased tariffs are expected to lead to higher inflation, while in Europe, lower demand may put downward pressure on inflation. However, developments are very hard to assess," said the Riksbank.

"The Executive Board assesses that monetary policy is currently well-balanced and that it is wise to await further information to obtain a clearer picture of the outlook for economic activity and inflation," added the central bank.

Prior to the monetary policy shift last year, Riksbank implemented ten consecutive rate hikes from August 2019, when the policy rate was just -0.50%, to September 2023, when the key rate reached 4.0%.

As a result of the Riksbank's successive key rate cuts, interest rates for new housing loans have been gradually declining in the past several months. In April 2025, new housing loan interest rates averaged 3.13%, down from 4.7% in the same month last year and 4.05% two years ago.

By initial rate fixation (IRF):

  • Floating rate and IRF of 1 year: 3.13% in April 2025, sharply down from 4.78% in the previous year and from 4.04% two years earlier.
  • IRF of 1-5 years: 3.14% in April 2025, down from 3.69% in the previous year and 4.08% two years ago.
  • IRF of 5-10 years: 3.4%, still higher than the previous year's 3.07% but down from 3.71% two years ago.

Sweden Interest Rates for New Housing Loans graph

Likewise, interest rates for outstanding loans have also started to fall. In April 2025, the average interest rate for outstanding housing loans stood at 3.09%, down from 4.13% in the previous year but still slightly higher than the 3.08% seen two years ago.

By maturity:

  • Maturity of up to 1 year: 3.15% in April 2025, down from 4.9% in the previous year and from 4.01% two years earlier
  • Maturity of 1-5 years: 2.92%, still higher than the 2.52% recorded in the previous year and 1.86% two years ago
  • Maturity of over 5 years: 2.34%, slightly up from 2.26% in April 2024 and 2.19% in April 2023

Sweden Interest Rates for Outstanding Housing Loans graph

Mortgage market conditions improving again

Record-low borrowing costs in the past two decades have caused a surge in housing loans, which grew from just 28.6% of GDP in 2001 to 56.5% of GDP in 2010, and finally to more than 70% of GDP in 2021.

The Finansinspektionen (FI) noted that the continued rapid increase in mortgage lending in Sweden during the said period was mainly due to rising house prices, driven by stable income growth, a growing population, as well as historically low interest rates.

However, in the past five years, the size of the mortgage market has shrunk back to below 70% of GDP, as households' purchasing power has been adversely impacted by the rapid increase in mortgage interest rates.

"Swedish households' loans have risen faster than household disposable income for a long time. This is partly due to low interest rates and rising housing prices," said an earlier FI report. However, in the past two years, the economic and financial conditions changed dramatically, and households experienced slightly improved financial conditions in 2024.

"After several years of high inflation and increasing interest rates, many households began to experience better financial conditions in 2024. The most visible improvement for households that have a mortgage was that the Riksbank started to make cuts to the policy rate," said FI's Swedish Mortgage Market report published in April 2025.

In April 2025, housing loans outstanding increased by 9.3% y-o-y to EUR379.59 billion, according to the European Central Bank (ECB), following an annual decline of 1.8% in 2024 and a minuscule growth of 1% in 2023.

In the past 20 years, housing lending to households has soared by around 400%.

The three largest housing finance institutions in Sweden are owned by Swedbank (Swedbank Hypotek), Handelsbanken (Stadshypotek), and Nordea (Nordea Hypotek).

Sweden Housing Loans Outstanding graph

Socio-Economic Context:


Sweden's economic performance remains sluggish

The Swedish economy grew by a meager 1% in 2024 from a year earlier, an improvement from a slight contraction of 0.1% in 2023 but still considerably weaker than the expansions of 1.5% in 2022 and 5.9% in 2021.

According to Riksbank, global uncertainty has risen due to U.S. trade policies, slowing growth in the U.S., and Europe. In Sweden, household confidence is down, and businesses are becoming more cautious.

In the first quarter of 2025, the economy expanded by 0.9% from a year earlier, following year-on-year growth of 2.4% in Q4 2024, 1% in Q3, 0.6% in Q2, and zero growth in Q1. Despite recent interest rate cuts, Sweden's economic growth remains sluggish due to the lingering impact of previously high borrowing costs on household consumption, weak industrial output, and subdued global demand.

"At the end of 2024, the Swedish economy started to show signs of a cyclical upturn, supported by lower interest rates and fading price pressures," said the European Commission. "However, real GDP stagnated in the first quarter of 2025, and the recovery is expected to be delayed by global trade disruptions. In addition to the direct negative effects of external economic developments, heightened uncertainty is set to weigh on business and consumer confidence."

The European Commission expects Sweden's economic performance to remain subdued in the medium term, projecting a real GDP growth of 1.1% this year and 1.9% in 2026. Though the International Monetary Fund (IMF) is more optimistic, projecting Sweden to post an economic growth of 1.9% this year and another 2.2% next year.

The Swedish economy had been growing at an annual average rate of 2.4% from 2013 to 2019 before contracting by 2% in 2020 due to the adverse effects of the Covid-19 pandemic.

Sweden GDP Growth and Unemployment graph

After three years of surplus, the country's central government balance in 2024 resulted in a deficit of SEK104 billion (EUR9.49 billion), according to the Swedish National Debt Office. The turnaround in the budget balance was primarily driven by rising expenditures due to previously high inflation, fiscal policy measures, and the Riksbank's capital injection.

The deficit was equivalent to 1.5% of GDP last year, from a surplus of about 0.15% of GDP in 2023.

Central government debt reached SEK1.15 trillion (EUR105 billion) by the end of December 2024, an increase of SEK124 billion (EUR11.3 billion) from a year earlier. As a percent of GDP, Sweden's gross public debt increased to about 33.5% of GDP last year, from 31.6% in 2023, 33.8% in 2022, 36.9% in 2021, and 40.4% in 2020. It remains amongst the lowest in the European Union.

As a percentage of GDP, the country is projected to post a budget deficit equivalent to 1.5% this year and a gross public debt of around 33.8%, based on estimates from the European Commission.

"Sweden's central government debt grows this year and next year as the budget deficit persists. This is due to expenditure for areas such as defence rising at the same time as tax income is dampened. The Swedish National Debt Office is meeting the larger borrowing requirement by continuing to increase the supply of government bonds," said the Swedish National Debt Office.

The labor market is weakening. The unemployment rate stood at 9.7% in May 2025, well above the 8.9% recorded in the previous month and 8.7% a year ago, according to Statistics Sweden. Nationwide unemployment averaged 7.6% from 2009 to 2019 before rising to 8.5% in 2020 and 8.9% in 2021. Unemployment went back down to 7.5% in 2022 but increased again to 7.7% in 2023 and further to 8.4% in 2024.

In May 2025, there were about 561,200 unemployed persons in Sweden, an increase of 65,500 from the same period last year. There were 275,600 unemployed men and 285,600 unemployed women.

"In response to modest economic growth, the labour market is expected to remain weak in 2025, with the unemployment rate rising to 8.7% before falling back somewhat in 2026 on the back of a modest pick-up in employment following the expected recovery with a lag," said the European Commission.

Inflationary pressures continue to ease. In May 2025, the nationwide inflation rate stood at 0.2%, sharply down from 3.7% in the same period last year and 9.7% two years ago, based on figures from Statistics Sweden. It is now significantly below the Riksbank's 2% target and marks the lowest rate recorded since November 2020, when it was also 0.2%.

After averaging a modest 1.5% from 2000 to 2020, inflation surged to 2.7% in 2021 and peaked at 8.1% in 2022. After staying elevated at 5.9% in 2023, inflation finally receded, averaging 2% in 2024.

Sweden Inflation graph

Sources:

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