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PROPERTY

Homes sell in record time in Sweden

Never before have homes in Sweden been on sale for such a short period of time. And it's no longer the villas with home offices that are flavour of the month, buyers are now favouring town apartments once again.

A view of buildings in Stockholm's old city.
A view of buildings in Stockholm's old city. People are most interested in buying centrally located apartments again now. AFP PHOTO / JONATHAN NACKSTRAND
In January, it took an average of 14 days to sell an apartment, while the equivalent for villas was 18 days. This is, on average, one day less compared to the same month last year, Swedish news agency TT reported.

This is the fastest time recorded since 2014, when Swedish property portal Hemnet began measuring the length of time it took to sell a property. Back then, a villa that was put up for sale in January could have been on the market for a month before it was sold.

Properties selling one day faster than a year ago may seem like a marginal difference, but it can be seen as an indicator of how the rest of the year will turn out.

“January is normally a month when the market is starting up, and it usually gets faster in spring,” said Erik Holmberg, an analyst at Hemnet.

Even if new homes come on to the market, the shorter sales time keeps supply down, creating a favourable situation for sellers but a tougher one for buyers.

“We have high demand in relation to the supply. There will be many interested parties per home for sale…As a buyer, you have to be a little more on your toes to keep up,” said Holmberg.

For the situation to change, there would have to be a slowdown in demand or a sharp increase in the amount of homes coming on the market, he explained.

Focus on apartments
During the height of the pandemic, people were looking to buy houses and many sought refuge outside of towns and cities where space was more limited and Covid-19 case numbers were typically higher.

“Many people spent more time at home. You worked at home and it was more difficult to travel abroad. This increased the demand for living space in general and for villas in particular,” said Holmberg.

But last autumn, buyers’ interest shifted back to apartments.

“When [Covid] restrictions were removed, having a home office became less important, we got a more normal market where the pressure is highest on apartments in central locations,” the analyst said.

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MONEY

Swedish central bank: Fewer risks to financial system but future still uncertain

Twice a year, Sweden’s central bank, the Riksbank, presents its overall assessment of risks and threats to the country’s financial system.

Swedish central bank: Fewer risks to financial system but future still uncertain

According to the most recent report, the bank states that near-term risks have declined, although there is still a considerable degree of uncertainty.

Financial conditions are better than they have been in recent years, due to lower inflation and expected interest rate cuts, the bank says. Having said that, policy rates could still remain at a relatively high level for a long time, which would increase the amount of pressure on the financial system.

The geopolitical situation also has a role to play – instability here increases the risk of cyberattacks which could damage the economy.

“Geopolitical risks remain high due to Russia’s ongoing invasion of Ukraine and the conflict in the Middle East,” the bank writes.

“This contributes to increased uncertainty about, for example, how world market prices for commodities and transport costs will develop. Further escalation of these conflicts could therefore lead to negative effects on the global real economy and increased risk premiums in financial markets.”

Swedish household debt is also high compared to many other countries, and the popularity of variable-rate mortgages means that the impact of high interest rates on Swedish households has been greater than elsewhere. This has affected household consumption considerably.

The bank argues therefore that structural reforms are needed to address what it describes as “fundamental problems in the housing market”.

It also identified consumer loans as a particular issue for many households struggling with their personal finances, as the number of households applying for debt restructuring increased significantly last year.

Here, the bank says, consumer credit banks have a significant market share and may not be carrying out adequate credit assessments for some loans.

This, the Riksbank states, could be improved by introducing a register of all borrowers’ loans to make credit assessments more transparent.

Another area of the economy heavily affected by high interest rates, the bank writes, is the property sector.

Again, the situation in the short term has improved for property companies, as interest rates and inflation have both dropped, but there are a lot of property companies which have not yet renewed their bank loans or bonds since rates first started going up, so their financing costs will rise.

In addition to this, the bank argues that Sweden’s financial structure needs to be modernised in line with the “structural transformation” taking place in Sweden and in the rest of Europe, underlining a need for a new and secure payment infrastructure.

The current company which manages retail payments in Sweden, Bankgirot, has been tasked by its owner banks to develop this new infrastructure, which provides another level of risk, as it must ensure that the current system runs smoothly during the transition to the new system.

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