Sweden's Residential Property Market Analysis 2026

Sweden’s housing market remains fragile, with house prices showing only minimal growth despite improving demand supported by declining interest rates. Residential construction activity remains subdued. However, the outlook is gradually improving as the country’s overall economic conditions strengthen.

This comprehensive overview by Global Property Guide examines the key features of Sweden’s housing market, including house price movements, demand and supply conditions, recent developments, and long-term trends.

Table of Contents

• Property Prices and Price Index
• Historic Perspective
• Property Demand Trends
• Property Supply Trends
• Rental Market: Rents and Rental Yields
• Mortgage Market and Interest Rates
• Economic and Social Factors

Property Prices and Price Index

In the fourth quarter of 2025, the national house price index rose by a miniscule 0.85% as compared to the same period last year, a slowdown from year-on-year increases of 1.27% in Q3 2025, 2.72% in Q2 2025, 2.64% in Q1 2025 and 2.07% in Q4 2024, based on figures from Statistics Sweden.

When adjusted for inflation, nationwide house prices registered a meagre growth of 0.36% during the year to Q4 2025.

In its January 2026 economic outlook for Sweden, Swedbank described the country’s housing market as lukewarm. The bank noted: “Housing prices were relatively stable during 2025, and Swedbank expects continued cautious price developments early this year. During the second half of the year, housing prices will pick up somewhat, supported by stronger purchasing power and the easing of mortgage regulations.”

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.

Sweden's house price annual change:

Quarterly, nationwide house prices fell by 1.05% (-0.97% inflation-adjusted) in Q4 2025, following quarter-on-quarter increases of 1.06% in Q3 2025 and 1.18% in Q2 2025 and declines of 0.32% in Q1 2025 and 0.64% in Q4 2024.

By region:

• Greater Stockholm house price index dropped 0.71% in Q4 2025 from a year earlier (-1.21% inflation-adjusted), in stark contrast to annual growth of 1.27% in Q3 2025, 4.32% in Q2 2025, 2.71% in Q1 2025, and 1.94% in Q4 2024, according to Statistics Sweden. Quarter-on-quarter, house prices were down by 1.65% (-1.57% inflation-adjusted) during the latest quarter.
• Greater Göteborg house prices were down slightly by 0.48% (-0.97% inflation-adjusted) in Q4 2025 from the previous year, after increasing by 0.71% in Q3 2025, 7.55% in Q2 2025, 4.1% in Q1 2025, and 0.72% in Q4 2024. Quarterly, prices decreased by 2.12% (-2.04% inflation-adjusted).
• Greater Malmö house prices rose by 1% (0.5% inflation-adjusted) in Q4 2025 compared to the same period last year, a slowdown from annual growth of 7.94% in Q3 2025, 1.57% in Q2 2025, 2.22% in Q1 2025, and 7.94% in Q4 2024. Though quarterly, house prices fell by 2.68% (-2.6% inflation-adjusted) in Q4 2025.

“The high supply of unsold apartments is holding prices down,” says Mattias Persson, Group Chief Economist of Swedbank. “However, as households’ financial position improves, we can expect to see a gradual rise in prices during the next two years. In 2027, we anticipate that Swedish housing prices will rise by about 4 per cent. We expect a cautious recovery for the housing market, given that households have recently experienced rapid increases in inflation and interest rates.”

Demand continues to improve, amidst declining interest rates. During 2025, nationwide home sales rose by a modest 3.9% to 54,872 units as compared to a year earlier, a slowdown from the prior year’s 13.2% growth, according to Statistics Sweden. Yet it remains a better showing than annual declines of 16.8% in 2023 and 7% in 2022.

However, residential construction activity remains weak. In the first three quarters of 2025, dwelling starts in newly constructed one- to two-dwelling buildings dropped by 2.5% y-o-y to 3,975 units and increased by a meager 0.8% y-o-y to 16,564 units in multi-dwelling buildings. Over the same period, dwelling completions in newly constructed one- to two-dwelling buildings plummeted by 29.6% y-o-y to 3,570 units and dropped sharply by 43.1% to 16,424 units for multi-dwelling buildings.

Yet the broader economy is starting to regain momentum. During 2025, the Swedish economy grew by approximately 1.4% to 1.5% from a year earlier, an improvement from a minuscule growth of less than 1% in 2024 and a slight contraction of 0.1% in 2023, primarily driven by a rebound in private consumption.

According to the Swedish government, GDP growth has been somewhat stronger than anticipated, indicating that the recovery is already underway. Looking ahead, domestic demand is expected to be the primary driver of growth, supported by rising incomes and pent-up consumption that are projected to lift household spending in 2026. Business investment is also forecast to expand at a faster pace than in recent years.

The European Commission expects Sweden’s economic performance to improve further in the coming months, projecting a real GDP growth rate of 2.6% this year and another 2.3% in 2027. Though the International Monetary Fund (IMF) provided a more conservative forecast, projecting Sweden to post an economic growth of 1.9% this year and 1.8% next year.

Regional differences in house prices

In the fourth quarter of 2025, six of the eight Riksområden (National Areas) of Sweden saw increasing house prices. RIKS8 Upper Norrland registered the biggest year-on-year price growth of 7.83% (7.3% inflation-adjusted) in Q4 2025, based on figures from Statistics Sweden.

It was followed by RIKS3 Småland with the islands, with house price growth of 4.69% (4.17% inflation-adjusted) during the year to Q4 2025. Moderate house price increases were also seen in RIKS5 West Sweden (3.93), RIKS6 Northern Central Sweden (3.46%), and RIKS4 South Sweden (3.45%).

RIKS2 Eastern Central Sweden saw a minimal house price growth of 1.66% (1.16% inflation-adjusted) during the year to Q4 2025.

In contrast, RIKS7 Central Norrland and RIKS1 Stockholm production county saw slight house price falls of 1.15% (-1.64% inflation-adjusted) and 0.06% (-0.55% inflation-adjusted), respectively.

RIKS1 Stockholm production county still had the most expensive housing in Sweden, with an average house price of about SEK 6.90 million (EUR648,956) in Q4 2025. Nationwide house prices stood at an average of SEK 3.84 million (EUR360,730) during the latest quarter.

Historic Perspective:

Low housing bubble risk, but household debt remains elevated

Following the sharp drop in Swedish house prices in 2023 and a sluggish housing market in 2024 and 2025, the risk of a real estate bubble in Stockholm is now considered low.

“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 UBS in its Global Real Estate Bubble Index 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 and the minimal house price growth in 2024-25, 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.

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

“Households that took out a new mortgage and amortised it spent, on average, after interest rate deductions, 18 per cent of their disposable income on interest rate and amortisation 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 the past two years, 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.

Household finances continued to strengthen in 2025, reflecting rising incomes and improved economic conditions.

Sweden’s housing market 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, significantly boosting borrowing capacity and fueling strong house price growth.

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).

The upward trend briefly stalled in 2008 and again in 2012. However, from 2012 to 2017, house prices surged by 45.1% (40.7% inflation-adjusted), driven by ultra-low interest rates, strong economic and income growth, rapid population increases, particularly in major urban centers and persistent housing supply shortages.

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, Sweden’s housing market began to show signs of recovery, with house prices returning to modest growth. Prices increased by 2.1% (0.8% in real terms) during the year, reflecting improving market sentiment and stabilising borrowing conditions.

“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.

However, the rebound proved short-lived, as price growth slowed again to just 0.9% (0.4% inflation-adjusted) in 2025, indicating continued fragility in the market.

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 amortised (i.e., paid back) at 1% every year, while loans worth over 70% of the property's value must be amortised at 2% annually.

From March 2018, any new housing loan borrowers with housing debts exceeding 4.5 times gross income have been required to amortise at least 1% in addition to the fundamental amortisation 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 amortisation 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 per cent of their income on interest payments after interest rate deductions. Every tenth borrower spent at least 17.5 per cent 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 amortisation payments, new mortgagors on average spent almost 18 per cent of their income on loan payments,” noted Finansinspektionen.

As the Riksbank implemented successive policy rate cuts over the past years 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.

Although the housing market remained subdued in 2025, several property experts expect conditions to improve in the second half of 2026 as household purchasing power strengthens, supported by stabilising inflation and a gradual economic recovery.

Another key factor underpinning this outlook is the government’s plan to ease mortgage regulations starting in April 2026. Proposed measures include reducing mandatory annual amortisation requirements and lowering the minimum down payment from 15% to 10% of a property’s value - changes that could enhance affordability and stimulate housing demand. Swedish bank Handelsbanken predicts property prices to increase by 6% in 2026.

Property Demand Trends

Demand continues to increase, albeit at a slower pace

Demand continues to show signs of recovery, amidst declining interest rates. During 2025, nationwide home sales rose by a modest 3.9% to 54,872 units as compared to a year earlier, a slowdown from the prior year’s 13.2% growth, according to Statistics Sweden. Yet it remains a better showing than annual declines of 16.8% in 2023 and 7% in 2022.

By major region:

• In Greater Stockholm, home sales increased by 7% y-o-y to 9,042 units in 2025, following a strong growth of 19.2% in 2024 and annual declines of 17.4% in 2023 and 13.5% in 2022.
• In Greater Göteborg, home sales were up by 8.4% y-o-y to 4,846 units last year, following a strong increase of 14.9% in 2024 and annual contractions of 15.9% in 2023 and 6.4% in 2022.
• In Greater Malmö, home sales rose by 7.1% y-o-y to 3,589 units in 2025, following a strong growth of 17.4% in 2024 and annual declines of 14.5% in 2023 and 11.8% in 2022.

By Riksområden (national areas):

• In RIKS1 Stockholm production county, home sales were up by 7% to 9,042 units in 2025, after surging by 19.2% in 2024 and falling sharply by 17.4% in 2023 and by another 13.5% in 2022.
• In RIKS2 Eastern Central Sweden, home sales increased modestly by 2.2% to 9,437 units last year, following a strong growth of 14.7% in 2024 and declines of 17.9% in 2023 and 2.4% three years ago.
• In RIKS3 Småland with the islands, home sales were up by 4.5% y-o-y to 5,196 units in 2025, an improvement from a meagre increase of 1.6% in the prior year and annual decreases of 16.1% in 2023 and 6.5% in 2022.
• In RIKS4 South Sweden, the number of homes sold rose by 5.9% to 9,289 units in 2025, after increasing by 14.3% in the prior year and declining by 18.6% in 2023 and 9.4% in 2022.
• In RIKS5 West Sweden, home sales grew by 5.8% y-o-y to 11,011 units last year, following an annual growth of 13.6% in 2024 and contractions of 17.3% in 2023 and 6% in 2022.
• In RIKS6 Northern Central Sweden, the number of homes sold increased by 2.2% to 5,462 units in 2025, following an annual growth of 12.1% in the prior year and declines of 15.7% in 2023 and 4.2% in 2022.
• In RIKS7 Central Norrland, home sales dropped slightly by 1% y-o-y to 2,352 units in 2025, following a growth of 11.5% in 2024 and decreases of 14.8% in 2023 and 5.7% in 2022.
• In RIKS8 Upper Norrland, home sales fell by 4.6% y-o-y to 3,083 units in 2025, following an increase of 12.8% in 2024 and declines of 9.6% in 2023 and 4.7% in 2022.

RIKS5 West Sweden, RIKS2 Eastern Central Sweden, and RIKS4 South Sweden accounted for more than half of all home sales in 2025.

Stable demand from foreign homebuyers

Nationwide, foreigners owned 37,973 holiday homes in Sweden in 2024, based on the latest figures released by Statistics Sweden in March 2025. This was a marginal 0.5% drop compared with 2023, continuing a trend of minimal fluctuations, with a 0.3% rise in 2023 and a 0.2% fall in 2022.

Overall, foreign ownership accounts for approximately 6% of the total holiday home stock in the country.

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%, 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.

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 recent 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-nine months, the SEK has appreciated by about 10.8%, from an average monthly exchange rate of SEK 11.833 = EUR 1 in September 2023 to SEK 10.678 = EUR 1 in January 2026. This appreciation has made Swedish homes more expensive for potential foreign buyers and international investors, potentially dampening demand from overseas markets.

Property Supply Trends

Residential construction activity stays subdued

Nationwide, dwelling starts in newly constructed one- to two-dwelling buildings dropped by 2.5% y-o-y to 3,975 units in the first three quarters of 2025 and increased by a meager 0.8% y-o-y to 16,564 units in multi-dwelling buildings, according to Statistics Sweden.

On the other hand, dwelling completions in newly constructed one- to two-dwelling buildings plummeted by 29.6% y-o-y to 3,570 units in the first three quarters of 2025 and dropped sharply by 43.1% to 16,424 units for multi-dwelling buildings.

By region:

• In Greater Stockholm, dwelling starts in all newly constructed buildings fell sharply by 16.7% to 6,150 units in Q1-Q3 2025 from a year earlier, while completions plunged by 16.6% to 7,955 units.
• In Greater Göteborg, dwelling starts in newly constructed buildings increased sharply by 45.1% y-o-y to 3,055 units in the first three quarters of 2025, while completions plummeted by 54.3% y-o-y to 2,155 units.
• In Greater Malmö, dwelling starts were up by 34.6% y-o-y to 1,998 units in Q1-Q3 2025, while completions fell sharply by 60.3% to 1,739 units.
• In Sweden, excluding metropolitan areas, dwelling starts fell by 2.2% y-o-y to 9,336 units in Q1-Q3 2025, while completions plummeted by 46.8% to 8,145 units over the same period.

“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.

The residential construction sector remained subdued last year.

“The construction industry in Sweden is expected to have contracted by 2.6% in real terms in 2025, owing to falling building permits, rising construction material costs, and rising energy prices,” said a report published by Research and Markets. “Residential construction sector remained the most affected sector, owing to low investor confidence, with significant year-on-year (Y-o-Y) declines in building permits.”

Dwelling stock growth decelerating

Nationwide, dwelling stock increased slightly by 0.9% y-o-y to 5,260,876 units in 2024, a slowdown from an annual average growth rate of 1.2% over the past decade, based on figures from Statistics Sweden. In fact, it marked the lowest growth in dwelling stock since 2014.

By property type:

• One- to two-dwelling buildings: stock rose slightly by 0.4% y-o-y to 2,136,854 units
• Multi-dwelling buildings: stock increased by 1.3% y-o-y to 2,756,647 units
• Special housing: stock was up by 2% y-o-y to 289,047 units
• Other housing: stock declined slightly by 0.8% y-o-y to 78,328 units

The slowdown in the growth of Sweden’s total dwelling stock can be partly attributed to subdued residential construction activity in recent years.

Rental Market: Rents and Rental Yields

Rental yields are moderately good

Gross rental yields in Sweden stood at 5.46%, on average, in Q4 2025, from 5.56% in Q2 2025, 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 Q4 2025:

• In Stockholm, apartments offer rental yields ranging from 3.38% to 5.85%, with a city average of 4.46%.
• Gothenburg’s gross rental yields currently range from 4.23% to 7.71%, with a city average of 4.85%.
• In Malmö, gross rental yields for apartments are higher, ranging from 4.69% to 7.11%, with a city average of 6.11%.
• In Uppsala, apartments offer good rental returns ranging from 5.04% to 7.1%, with a city average of 6.4%.

Rents continue to increase

Prior to the COVID-19 pandemic, rents in Sweden increased by around 20% between 2009 and 2019, outpacing cumulative inflation of roughly 12% over the same period.

Sweden's rent price index:

However, the trend reversed in 2022–2023, when nationwide inflation surged to record levels, averaging 8.4% in 2022 and 8.7% in 2023. These rates were more than double the average annual rent increase of 4.1% during those two years, resulting in rents lagging behind overall price growth.

During 2025, new rent for dwellings in Sweden increased by 5.5% to an average of SEK 8,089 (EUR761) per month, following year-on-year growth of 6.1% in 2024, 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 6.8% y-o-y to SEK 9,200 (EUR 865) per month in 2025, following increases of 5.9% in 2024, 4.5% in 2023, 2.9% in 2022, and 2.5% in 2021.
• In Greater Göteborg, dwelling rents increased by 4.1% y-o-y to SEK 8,130 (EUR 765) per month in 2025, after rising by 6% in 2024, 5.8% in 2023, 3.2% in 2022, and 2.3% in 2021.
• In Greater Malmö, the average monthly rent for dwellings rose by 5.7% y-o-y to SEK 9,160 (EUR 861) per month last year, following growth of 7.9% in 2024, 5.1% in 2023, 3.5% in 2022, and 2.3% in 2021.

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

Mortgage Market and Interest Rates

Housing loan interest rates decline amid the Riksbank’s expansionary monetary policy

In January 2026, Riksbank’s Executive Board decided to keep its policy rate unchanged at 1.75% for the third consecutive meeting, aiming to support economic activity while steering inflation sustainably toward its target over the longer term. However, policymakers cautioned that uncertainty surrounding both inflation and growth has intensified, partly due to rising geopolitical tensions and evolving U.S. trade and foreign policy.

Sweden's mortgage loan interest rates:

“Despite the high level of uncertainty, the Swedish economy grew at a solid pace at the end of last year. New information indicates that household consumption continued to rise and that economic developments as a whole have been somewhat stronger than expected. The labour market situation remains weak, but there are increasingly clear signs of improvement. Inflation was lower than expected in December, and is now close to the target of 2 per cent,” said the Riksbank in its monetary policy decision in January 2026.

“However, the uncertainty regarding the outlook for inflation and economic activity has increased. Recent developments, for instance, in relation to US trade and foreign policy, have widened the range of potential outcomes for what can happen going forward,” added the central bank.

Prior to this, the Riksbank implemented eight consecutive rate cuts from April 2024, when the policy rate was 4.00%, to September 2025, when the key rate reached 1.75%, in an effort to buoy the economy.

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 December 2025, new housing loan interest rates averaged 2.69%, down from 3.31% in the same period last year and from 4.76% two years ago.

By initial rate fixation (IRF):

• Floating rate and IRF of 1 year: 2.65% in December 2025, sharply down from 3.39% in the previous year and from 4.85% two years earlier.
• IRF of 1-5 years: 2.93% in December 2025, slightly up from 2.85% in the previous year but down from 4.17% two years ago.
• IRF of 5-10 years: 3.23%, still higher than the previous year’s 2.75% and slightly up from 3.21% two years ago.

Likewise, interest rates for outstanding loans continue to fall. In December 2025, the average interest rate for outstanding housing loans stood at 2.74%, down from 3.52% in the previous year and from 3.96% seen two years ago.

By maturity:

• Maturity of up to 1 year: 2.7% in December 2025, down from 3.8% in the previous year and from 4.93% two years earlier.
• Maturity of 1-5 years: 2.92%, still higher than the 2.75% recorded in the previous year and from 2.31% two years ago.
• Maturity of over 5 years: 2.37%, slightly up from 2.29% in December 2024 and from 2.26% in December 2023.

Mortgage market conditions continue to improve

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 four 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.

Mortgage market conditions continued to strengthen in 2025.

In December 2025, the total value of housing loans outstanding in Sweden increased by 8.9% y-o-y to EUR 393.15 billion, according to figures from the European Central Bank (ECB), following an annual decline of 1.8% in 2024 and a minuscule growth of 1% in 2023.

Over the past two decades, housing loans extended to households have surged by roughly 400%.

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

Economic and Social Factors

Sweden’s economic conditions improving gradually

During 2025, the Swedish economy grew by approximately 1.4% to 1.5% from a year earlier, an improvement from a minuscule growth of less than 1% in 2024 and a slight contraction of 0.1% in 2023, primarily driven by a rebound in private consumption.

“Despite the high level of uncertainty, the Swedish economy grew at a solid pace at the end of last year. New information indicates that household consumption continued to rise and that economic developments as a whole have been somewhat stronger than expected,” noted the Riksbank in its January 2026 Monetary Policy Statement.

According to the Swedish government, GDP growth has been somewhat stronger than anticipated, indicating that the recovery is already underway. Looking ahead, domestic demand is expected to be the primary driver of growth, supported by rising incomes and pent-up consumption that are projected to lift household spending in 2026. Business investment is also forecast to expand at a faster pace than in recent years.

The European Commission expects Sweden’s economic performance to improve in the coming months, projecting a real GDP growth rate of 2.6% this year and another 2.3% in 2027. Though the International Monetary Fund (IMF) provided a more conservative forecast, projecting Sweden to post an economic growth of 1.9% this year and 1.8% next year.

“In 2026, real household disposable income is set to be supported by fiscal measures, including tax reductions and lower indirect tax on food, gains in real wages, lower interest rates and falling inflation, all factors expected to contribute to increasing private consumption,” said the European Commission. “Gross fixed capital formation is also expected to contribute to the upturn, given increases in public investment, including capital outlays on defence, while the previous drag from housing construction is bottoming out. With improving business and consumer confidence, economic growth is set to reach 2.6% in 2026.”

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. The economy bounced back quickly in 2021, registering a post-pandemic growth of 5.9%. However, momentum faded quickly in 2022, as real GDP growth slowed sharply to just 1.5%.

During 2025, the country’s central government balance resulted in a deficit of SEK 101.9 billion (EUR 9.58 billion), slightly down from the prior year’s SEK 104 billion (EUR 9.78 billion), according to the Swedish National Debt Office. The return to deficit spending contrasts with the three consecutive years of surpluses recorded from 2021 to 2023, underscoring the fiscal impact of recent economic and policy developments.

“The central government budget balance showed a deficit for the second year in a row. Despite a first incoming payment to Sweden from the EU Recovery and Resilience Facility, amounting to SEK 18.5 billion, the deficit was approximately the same size as in 2024,” said the Swedish National Debt Office. “This is due, among other things, to the weak economy and fiscal policy measures in the form of tax cuts and spending increases. Higher interest payments also contributed to the deficit remaining at the same level as in 2024.”

The deficit was equivalent to about 1.95% of GDP last year, following a shortfall of 1.6% of GDP in 2024.

Central government debt reached SEK1.24 trillion (EUR117 billion) by the end of December 2025, an increase of SEK93 billion (EUR8.75 billion) from a year earlier. As a percentage of GDP, Sweden’s gross public debt increased to about 34.5% of GDP last year, from 33.5% in 2024, 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.

The country’s fiscal position is forecast to weaken in the year ahead, driven by rising deficits and public debt.

“In 2026, despite a pick-up in activity, the deficit is set to deteriorate further to 2.4% of GDP. This is due to budgetary measures adding up to close to 2% of GDP (which is among the last decade’s largest packages, apart from the exceptional COVID-19 budgets), notably on defence and support to Ukraine, as well as a decrease in income taxes and the temporary VAT reduction on food. As of 2026, the government expects to start spending on the multi-year support scheme for new nuclear facilities,” said the European Commission. “Debt is set to increase to 35.3% of GDP in 2026 and to just below 36% in 2027, still some 4 percentage points below the ceiling of Sweden’s own “debt anchor” rule.”

The labour market remains broadly resilient. In January 2026, the nationwide unemployment rate stood at 8.6%, slightly up from 8.3% in the previous month but still down from 10.4% in the same period last year, according to Statistics Sweden. The country’s 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. During 2025, the jobless rate was estimated to have risen again to an average of 9.0%.

In January 2026, there were about 490,000 unemployed persons in Sweden, a decrease of 102,000 from the same period last year. There were a total of 264,000 unemployed men and 225,000 unemployed women over the same period.

Inflation remains manageable. In January 2026, the nationwide inflation rate stood at 0.5%, slightly up from 0.3% in the previous month but lower than the 0.9% recorded a year earlier, based on figures from Statistics Sweden. It remains significantly below the Riksbank’s 2% target.

“Increased electricity prices and higher fees for rental apartments were among the largest contributions to the inflation rate according to the CPI in January,” says Mikael Nordin, statistician at Statistics Sweden.

After averaging a modest 1.3% from 2000 to 2020, inflation increased to 2.2% in 2021 and accelerated further 8.4% in 2022. After reaching a peak of 8.7% in 2023, inflation finally receded, averaging 2.9% in 2024 and just 0.7% in 2025.

Sources:

• Real estate price index for one- and two-dwelling buildings for permanent living by region. Quarter 1986K1 - 2025K4 (Statistics Sweden): https://www.statistikdatabasen.scb.se/
• What will happen to property prices in Sweden in 2026? (The Local): https://www.thelocal.se/
• UBS Global Real Estate Bubble Index 2025 (UBS): https://www.ubs.com/
• 6 per cent of holiday homes in Sweden have foreign owners (Statistics Sweden): https://www.scb.se/
• Construction of new dwellings in the first three quarters of 2025 (Statistics Sweden): https://www.scb.se/
• Sweden Construction Market 2025 (Research and Markets): https://www.researchandmarkets.com/
• Rent in rented dwellings by region, number of rooms and year of construction. Year 2016-2025 (Statistics Sweden): https://www.statistikdatabasen.scb.se/
• Bunge: Recovery in the Swedish economy, continued resilience in the housing market remains important (Sveriges Riksbank): https://www.riksbank.se/
• Policy rate, deposit and lending rate (Sveriges Riksbank): https://www.riksbank.se/
• Policy rate unchanged at 1.75 per cent (Sveriges Riksbank): https://www.riksbank.se/
• Gross rental yields in Sweden: Stockholm and 3 other cities (Global Property Guide): https://www.globalpropertyguide.com/
• The Swedish Mortgage Market 2024 (Swedish Financial Services Authority): https://www.fi.se/
• The Swedish Mortgage Market 2020 (Swedish Financial Services Authority): https://www.fi.se/
• The Swedish Mortgage Market 2023 (Swedish Financial Services Authority): https://www.fi.se/
• Economic forecast for Sweden (European Commission): https://economy-finance.ec.europa.eu/
• Sweden (International Monetary Fund): https://www.imf.org/
• Sweden Full Year GDP Growth (Trading Economics): https://tradingeconomics.com/
• Swedish economic recovery underway (Government Offices of Sweden): https://www.government.se/
• Deficit for Swedish central government in 2025 (Swedish National Debt Office): https://www.riksgalden.se/
• Labour Force Surveys (LFS) (Statistics Sweden): https://www.scb.se/
• The inflation rate according to the CPI was 0.5 per cent in January 2026 (Statistics Sweden): https://www.scb.se/
• The inflation target (Sveriges Riksbank): https://www.riksbank.se/