Sweden’s housing bubble to pop

EPA/MAURITZ ANTIN

A file photo showing the old town, 'Gamla Stan', in Stockholm, Sweden, with the German Church at center and the Royal Palace on background, as seen from Soedermalm suburb.

Sweden’s housing bubble to pop


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Sweden’s real estate brokers and one of the country’s largest developers have warned that the country’s massive housing boom is at risk of bursting.

According to data released by Svensk Mäklarstatistik, which works with brokers and the government’s official statistics office to gather data on property sales, house and apartment prices barely inched up over the last month. Instead, they have increased a little over 1% in the last three months. Over the previous 12 months, however, housing prices increased 9% and 6% for apartments.

As reported by The Financial Times, the average time taken for properties to sell over the last three months also increased. Per-Arne Sandegren, the chief analyst at Svens Mäklarstatistik, said “we have a somewhat cautious market where we see that an increased supply is not matched by the same increase in sales”.

Sweden’s record-low interest rates – the Riksbank’s benchmark rate is -0.5% despite rapid economic growth – have encouraged a boom in house prices in recent years, with central Stockholm property now costing an average of SKr91.8k per square metre.

Developers have responded to the boom by building large numbers of new properties, increasing the risk that a supply glut will exacerbate any eventual downturn, reported The Financial Times.

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