Swedish property market at ten-year low

The Swedish commercial property market has ground to a halt with completed deals continuing to decline. The private residential market has returned to normal however.

Turnover in the Swedish property market amounted to 9.2 billion kronor ($1.25 billion) in the first half of 2009 – the lowest level for ten years. This equates to an 80 percent decline on the corresponding period for 2008, according to a report from property consultancy Newsec.

“The enormous fall is mainly a result of difficulties to secure loans on reasonable conditions,” Marie Bucht at Newsec explained.

“It is also harder for buyers and sellers to agree a price in a falling market,” she said.

This is a picture that was reflected in sales of private residential properties as the brutal reality of recession dawned on the market last autumn, Claudia Wörmann, at property market statistics firm Mäklarstatistik, told The Local on Wednesday.

“In October or November when the scale of the problems became known, the market dried up. There was a massive gulf between the expectations of buyers and sellers,” Wörmann explained.

“But since the latest round of interest rate cuts the market has more or less returned to normal with buyers and sellers operating on the same playing field in terms of expectations.”

While credit problems continue to afflict the commercial property market, an exodus by foreign investors has accentuated the fall.

Swedish investors, with greater knowledge of local markets, were those most active in the first half of the year with residential properties attracting the most interest.

“We currently have 50 parties interested in buying residential properties in regional cities. It is a completely new situation and shows that there are buyers for the right objects,” Marie Bucht said.

While commercial rents in Stockholm and other major cities continue to decline – down 10-15 percent in central areas of the capital in the first half of 2009, prices of houses and apartments have remained broadly unchanged while showing some regional variations.

Apartment prices in fact increased by 4 percent in central Stockholm in July to 51,251 kronor per square metre. In central Gothenburg prices climbed 3 percent, while in central Malmö prices dropped 5 percent.

“An explanation of the small changes in price is that people who have been made redundant or in some way are affected by the recession are not the same people we see at property showings today,” Claudia Wörmann said.

Wörmann underlines that the statistics are for a month, and for a traditionally slow July. Over the past quarter prices have climbed in all major Swedish cities and in Stockholm prices are back at where they were in July 2008.

“The development in central Stockholm usually serves as guidance for the rest of the country.”

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