Even at the start of the year, property prices in Sweden were at their all-time highs, but now they’ve plummeted 15% from those heights. Such a decline in the housing market in the largest Nordic economy can second Agent Bloomberg delve into the nascent economic downturn, with commercial real estate the biggest risk. Growth in Sweden stalled after about a decade, when it was mainly fueled by cheap credit, housing shortages and low-interest mortgages.
And according to Bloomberg, the rising cost of borrowing and rising inflation are behind the sharp decline in property prices. “The market is going through a radical change,” said Annika Winsthová, an analyst at financial institution Nordea Bank Abp.
Sweden is currently experiencing the fastest decline in property prices, but it is not alone in this situation. Canada, Australia and New Zealand are also experiencing similar declines. And more than a dozen other countries with developed economies are either in the midst of a house price slump or on the verge of one. The Czech real estate market is also cooling down. UniCredit Bank analyst Jiří Pour said he expects property prices to fall by up to 5% next year.
However, the situation in Sweden is more delicate than in the countries mentioned above. Bloomberg reports that around 64% of Swedish residents own real estate. However, most of them don’t have long-term mortgages with a fixed interest rate, so any change in these rates is a very obvious blow to them. Swedish household debt now accounts for more than 90% of the country’s gross domestic product, and this could have a severe impact on consumption, for example, in retail trade.
The pressure that the Swedish economy is facing in recent weeks could therefore plunge the country into the worst recession in the last 27 years.
| The country’s largest real estate developer, Central Group, has suspended the launch of several phases of its projects due to falling demand. More here >>> |
Z(a)lost the numbers 16th episode – Fall in apartment prices
