Wednesday, June 15, 2016
New Rules Caused The Sharpest Decline In Swedish Housing Market Since The Financial Crisis
Via Business Insider: Sweden has a notoriously hot housing market. Steady economic growth and slow interest rates have propelled property prices several years in a row, causing warnings about a debt crisis and a housing bubble from top economists. In the last 12 months, prices have risen 11 % on average in Sweden according to Svensk Mäklarstatistik. The average square meter price for an apartment in Sweden was 38 079 kronor. In central Stockholm the average square meter price was 88 344 kronor. In May however, the cost of buying an apartment in a shared building fell sharply. According to Valuegard, an index compiling data from Swedish real estate agents, prices were down 2.7 %. The prices for houses were down 1.1 %. Why now? Following much debate, on June 1 new rules forcing Swedes to pay off mortgages were introduced. The rules mandate that loans for more than 50 percent of the value of the property will have to be amortized one percent a year. For loans exceeding 70 percent of the value, the requirement is two percent a year. The new rules increased the supply of apartments, since sellers wanted to exit the market before they were introduced. The number of apartments for sale in Stockholm in May is reported to be the highest ever.