Developments in the real estate market have been mixed since the inflation and interest rate increases in 2022 and have since recovered. On the one hand, there are condos in central Stockholm that are now selling at new record levels, and on the other hand, there are areas where prices have still not recovered since 2021.
Statistics from the housing platform Hemnet show that it is primarily the most expensive apartments that have recovered since the price peak and have increased in price, while the cheapest ones are still significantly lower in price. As a result, the differences between the segments have increased.
The pattern is different Since property prices fell in 2018 and 2019, it was the most expensive houses that fell the most in percentage terms. According to Hemnet analyst Erik Holmberg, this could be partly related to behavior during the pandemic, when many people moved from big cities to peripheral communities with lower prices per square meter.
– Then they saw big price increases there, but when interest rates started to rise and people returned to the office, that reversed, he says.
Another explanation is that economically weaker households were hit harder by inflation and rising interest rates, while wealthier buyers were still able to afford expensive homes.
– At the beginning of the interest rate hike phase, it was assumed that the Stockholm real estate market, where prices are generally high, would be the most affected. But it was more the other way around, says Erik Holmberg.
Ulrica HedmanCEO of the real estate agency, believes that the prices of the most expensive properties correlate more closely with developments on the stock market. And the stock market has performed strongly in recent years, even though we have been in a recession.
“There is always a target group with strong purchasing power who is willing to act when beautiful houses are built in attractive areas,” she says.
The pattern is clear in both Stockholm and Gothenburg, she believes, while the same trend is not evident in Malmö.
– Malmö is also a big city market, but with significantly lower prices, and here you don’t really recognize yourself in this development. Even in medium-sized cities across Sweden, we don’t see the same general price increase for particularly expensive properties, but good properties are sold at stable prices, says Ulrica Hedman.
Expected later this spring Easing amortization rules and raising mortgage caps, which will likely lead to rising prices. Erik Holmberg believes that the differences between more expensive and cheaper properties could even out somewhat in the longer term.
– The fact that the required cash investment is reduced from 15 to 10 percent can in many cases benefit the cheaper houses. At the same time, I wouldn’t be surprised if this spread could continue to increase for a while in the coming years, he says.
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