Sweden’s house prices surge, as foreign investment climbs

Photo: MRLins

Sweden’s housing market continues to accelerate in 2016, with house prices rising and foreign investment on the up.

According to Statistics Sweden, house prices rose 10.64 per cent in 2015 compared to 2014, higher than the previous year’s growth of 6.86 per cent and the highest growth since 2007.

Investment has also reached record levels at the start of the year. Research from Savills shows that investment turnover reached SEK 35bn in the first quarter of 2017, 39 per cent higher than Q1 2015 and 11 per cent higher than the previous Q1 record set in 2007.

“The activity from international investors has increased rapidly over the past two years and the market share has continued to grow in Q1 2016,” reports Savills, with cross-border investment increasingly steadily since 2009. Last year, foreign investors accounted for 21 per cent of the total transaction volume – and that share has risen further to 24 per cent in the first quarter of 2016.

Interest for assets in the industrial and warehouse sector, in particular, has increased significantly during the past years and represented 19 per cent of the total transaction volume in Q1 2016. The historically low yields across all property sectors are expected to remain stable and the demand is likely to remain high.

Sweden is characterized by a strong expansionary monetary policy and Savills forecasts the Swedish economy to remain strong throughout 2016, with GDP growing and unemployment falling. The main drivers of the economy in the short run will be private and public consumption and rising investment into residential developments, while the weaker SEK will also boost exports and contribute to the economic growth. However, Sweden is facing challenges with headwinds of a rapidly increasing population and polarisation in the recovering job market.

“Recent repo rate cuts by the Bank of Sweden will be favourable for the property sector as the costs for financing will remain at historically low levels,” says Peter Wiman, Head of Research Savills Sweden. “The interest for property investments across all sectors is very strong and 2015 could have been a record year in terms of volume if more property owners were interested in selling.”