A Swedish developer says the country’s property market is ripe for new investors.
Sweden’s rental market is still struggling to recover from a historic housing bubble and is set to rebound, says Andreas Andersson, chief economist at Rydmark, a research and advisory firm.
The country has experienced one of the biggest price wars in Europe in recent years.
Swedish buyers are still buying homes, but they are also selling off older ones, particularly in areas of Stockholm where there is less demand for new housing.
Andersson expects that trend to continue in the coming years.
“Sweden has been one of our main housing markets, especially in the last few years, so it’s not surprising that it’s one of those markets that has the most pent-up demand,” he said.
“We have an interesting property market right now, and it is very attractive to people who have the financial resources.”
The country’s rental prices have plunged from their peak of around 50 percent of median household incomes in 2005, as a result of a worldwide recession and a tightening mortgage market.
Swedes’ median household income has fallen from roughly 50 percent to less than 40 percent of the national average since 2009, and the country is in recession.
In 2016, a report by the Swedish Association of Estate Agents said the country had lost more than $2 billion in real estate transactions over the previous five years.
At the same time, many Swedes have been forced to take on more debt, which has contributed to a massive rise in home ownership.
Renting in Sweden has been rising rapidly since the housing bubble burst in 2008.
In the first quarter of 2018, the average Swedish house price hit $1.5 million, an increase of more than 80 percent from the first three months of the year.
Swede homeowners are now paying about 3.3 times as much for a house as they did in 2008, the highest price rise in Europe.
Anderssson expects this trend to accelerate.
“The mortgage market is very different now from when the bubble burst, when we could easily take out mortgages for our whole family,” he explained.
“But that’s no longer the case, and I think that’s because the economy is much more stable and the economy’s much better.”
Sweden is now a nation of renters, according to Andersson.
According to the government, the country has a rental vacancy rate of just 3.5 percent, which is lower than the average of around 10 percent.
The average rent for a one-bedroom apartment is now about $1,000 a month, up from $1 and $1 million in the early 1990s, respectively.
In the meantime, Swedes are also seeing a boom in the housing market, with average house prices up about 5 percent since last year, and new listings hitting a record high.
Anderssen expects this to continue for the next few years.
The market is expected to recover in the next year, however.
Andersons view is that the Swedish economy will return to normal and the government will implement policies that will help keep the rental market strong.
Swesen homeowners are expected to continue to buy new homes, while new buyers are expected start to move into rental properties in the same way as they do in the United States.
But if you are buying, you will need to be aware that there are risks associated with the new ownership model, as there is a risk that the price you pay could fall, Andersson said.
“It’s a risk-averse market, and you can’t afford to take it.
You have to be very cautious,” he stressed.