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Euro Crisis cools the bubbly Swedish housing market further

Thursday, 10 November 2011
Supply of housing in Sweden has collapsed even though there is still high demand for it.  But particularly, condominiums for sale in Stockholm have decreased in the number produced, and the trend in same in the whole country.

According to news reviews from latest figures, it shows that in August and September, the supply of both houses and condominiums has been at record high, but during October, the number of objects shrunk considerably.

In September 2381 houses where registered on website Hemnet for rental which was a new record. The last week of October the figure was down to 1949. In just over a month the supply has decreased by 18 percent and now stands at just below the 2008 level.

According data from data Hemnet, the biggest real estate website in the country, there has been a clear reduction in the number of new items for sale.
Speaking to the Swedish daily, Dagens Nyheter, Carl-Henrik Borg, CEO of Hemnet said that “We have seen a downward trend for condominiums, but also for private houses, the last month. Thus, the range is down to more normal levels.”

He sees several reasons for the decline such as the stringent requirements by banks as economic turmoil in the world affects the interest in home business.

“Now the banks require that its customers to sell before they get loans to buy a new home. We also see that price expectations have fallen. It is the deteriorating economy in Europe affecting that perception”, says Carl-Henrik Borg.

Even Claudia Wörmann, analyst at the industry organization, Mäklarsamfundet (Real Estate Agents association), sees a reduction in supply and a more conservative attitude in the housing market.

“We see a cautious attitude. There are fewer people asking and sales take a take longer. Many want to wait and see what happens in Greece and now Italy,” she says.
Also it mortgage ceiling which the banks introduced a year ago is also a hamper to business. Te ceiling means that home buyers have to finance 15 percent of the purchase price – before it’s was 10 percent and some cases it was less.

“We'll probably have a pretty stagnant market for a while, and even a some paralysis. People must constantly move because of changes in family status, but right now we are stuck in the euro crisis,” says Claudia Wörmann.

Peeter Pütsep, president of brokerage chain Swedish Property, points out that the number of pending transactions was at a fairly constant level, despite the availability of both condominiums and villas declining significantly.

Condominiums are more volatile than houses and have a shorter shelf life. There is a partial explanation for the reduced availability of these prices.
“The role of the debt crisis is crucial because of its psychological factors that affect the future behaviour of consumers. You don’t have to dare to do business,” says Peeter Pütsep, who believes that many refrained from putting out their homes for sale, pending the outcome from events in especially Greece and Italy.

Several players in the mortgage industry are now hoping that the Riksbank or the Swedish central bank will follows the European Central Bank's example and cut its key interest rate in December.
By Scancomark.se Team

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