Sweden’s housing market continues to accelerate, fuelled by very low interest rates and a shortage of housing supply. The nationwide house price index surged 10.64% (10.1% inflation-adjusted) in 2015 compared to the previous year, higher than the rise of 6.86% in 2014 (6.64% inflation-adjusted), based on figures from Statistics Sweden – and the highest growth since 2007. House prices increased 2.4% (2.2% inflation-adjusted) in Q4 2015.
- Greater Stockholm house prices rose by 13.6% (13.05% inflation-adjusted)
- Greater Göteborg house prices increased by 11.76% (11.22% inflation-adjusted)
- Greater Malmo house prices rose by 9% (8.47% inflation-adjusted)
Of the eight Riksområden (National Areas), RIKS1 Stockholm registered the biggest y-o-y increase of 13.7% (13.14% inflation-adjusted) in 2015, followed by RIKS8 Upper Norrland (13.58%) and RIKS2 Eastern Central Sweden (10.96%), RIKS7 Central Norrland (10.48%), and RIKS5 West Sweden (10.03%). Over the same period, strong house price increases were also seen in RIKS6 Northern Central Sweden (9.07%), RIKS3 Småland with the islands (7.69%), and RIKS4 South Sweden (6.5%).
Demand is rising, but only slightly. Home sales rose 1.17% in 2015, to 55,528 units, according to Statistics Sweden, a slowdown from average annual growth of 5.3% during the previous two years.
During 2015, the Swedish economy expanded strongly by 4.1%, up from annual growth rates of 2.3% in 2014 and 1.3% in 2013 and from a y-o-y contraction of 0.3%. The economy is expected to grow by 3.2% this year and by 2.9% next year, according to the European Commission.
The outlook for Sweden’s housing market is, however, mixed. House prices are expected to continue rising this year, amidst robust economic growth and ultra-low interest rates, according to local property experts. However, the Swedish central bank (the Sveriges Riksbank) and other economists are concerned that Sweden is now in an unsustainable property bubble that is ready to explode anytime.