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Significant Price Increase on the Housing Market

Condominium prices rose sharply in October. A market player is now talking about a trend shift. To be brutally honest, we are back at a level we haven't seen since Russia's invasion of Ukraine, says Erik Wikander, Vice President of Svensk Fastighetsförmedling.

» Published: 08 November 2024

Significant Price Increase on the Housing Market
Photo: Janerik Henriksson/TT

The price increase for apartments is written up to 2.1 percent at the national level compared to the previous month, according to new figures from Swedish Real Estate Statistics. Regionally, an even clearer increase is noted, particularly in Greater Stockholm where prices are rising by 3.8 percent.

Erik Wikander calls the increase "remarkable" and "extremely large" to cover a single month, at the same time as there has been a period with a large number of increasing transactions, which in theory should be able to imply a certain price dampening.

— We are back at very high levels in October. Looking isolated at apartments, we are not far behind when it was hottest during the pandemic, he notes for TT.

Positive signals

The housing market has received several positive signals in recent months, as recently as yesterday in the form of the Swedish Central Bank's announcement of a 0.5 percentage point interest rate cut. Recently, an investigation was presented to the government on easing amortization requirements, and inflation has continued to remain at a low level.

Svensk Fastighetsförmedling estimates that the price increase this year will land at 3-5 percent.

I do not think we can expect the type of wild price development we have seen before, says Erik Wikander.

But the picture is mixed. While apartment prices are rising clearly, October was the third month in a row with falling villa prices. At the national level, prices fell by 0.7 percent, which, however, has an explanation according to Erik Wikander:

What took off first was the villa market, particularly during the spring, while apartment sales lagged behind. It drove up villa prices during the first half of the year and now we see a weak correction, simultaneously with a seasonal effect.

Regional differences

There are also large regional differences. According to Erik Wikander, about a quarter of all sales take place outside public advertising, i.e., apartments are sold before viewing. But while metropolitan regions like Stockholm are now showing significantly greater pressure in terms of viewings and bidding, it is different around the country.

Seen across the country as a whole, there is a lag. It is not nearly as many bidders in each individual deal as a couple of years ago.

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By TTThis article has been altered and translated by Sweden Herald

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