September 25, 2021

Record rise in property prices in Sweden, despite the Covid-19 pandemic

Anders Hansson and his wife are looking for a house in Malmö. With their three children, they are cramped in their apartment. Sunday, May 30, they were to visit a villa, in the Nya Bellevue district, not far from the center: 164 m2, six rooms, a small garden. Selling price: 7.195 million crowns (712,000 euros). Two days later, the buyers had raised the price to 9.6 million crowns (nearly 1 million euros) and the auction continued …

This kind of anecdote, all Swedes who have ever tried to become owners can tell. With the pandemic, economists had predicted a slowdown in this inflation, which Björn Wellhagen, head of the Association of Swedish Real Estate Agents, admits is “Abnormal”. Now he and Cecilia Hermansson, a researcher in real estate economics and finance at the Royal Institute of Technology (KTH), in Stockholm, agree that they “Were wrong in [leurs] predictions “.

Instead of settling, real estate prices have exploded over the past twelve months: a record increase of 18.8%, on average, since May 2020, for single-family homes. The price of condominiums has jumped by 10% and that of second homes by 15%. “In Stockholm, the price of villas has increased by 1 million crowns, on average, in a year”, clarifies Björn Wellhagen.

No confinement

In northern Europe, Sweden is no exception. Despite the pandemic, house prices have risen by around 12% in Norway year on year and just over 13% in Denmark. In Finland, the more moderate increase was limited to the capital Helsinki and its region. The Swedish market stands out for the scale of price growth, which shows no sign of slowing down.

There are many reasons. First, and despite the health crisis, “The labor market has held up well for a large majority of the population. Measures to support partial activity have made it possible to limit the rise in unemployment and maintain the level of income ”, noted Cecilia Hermansson.

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In addition, Sweden has not imposed confinement: bars and restaurants have never closed, nor have sports halls or shops. The kingdom has thus limited the damage, with a drop of only 2.8% of its gross domestic product (GDP) in 2020, according to the Institute of Statistics (SCB). “Overall, owners have been less affected by the crisis. They kept their salaries, and their expenses fell ”, observes Björn Wellhagen. No travel to southern Europe and few city trips.

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