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General State of the Swedish Economy and Swedish Housing Market

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I had a job-related move to Sweden from the UK a month ago and, surprisingly, I like absolutely everything about this country. No doom and gloom, well, at least I have not noticed it. The economy and SEK are very strong, everything moves regardless of the amount of snow, it looks very industrial, not overpopulated, prosperous, no benefit fraud (compared to the UK scales) and low unemployment. People pay more tax here but get much more in return too. This is something I don't mind doing, especially taking the cost of childcare into account 800GBP/child in the UK & equivalent of 80-100GBP/child in Sweden.

 

The property prices are very similar to the UK ones with the only exception that the same amount of money can buy many more square metres. The salary even after Swedish tax is ~20-30% higher (mainly due to strong SEK).

 

Keeping this in mind and assuming that the childcare costs are next to nothing, I just wonder what is considered to be a healthy annual income multiple which one can prudently borrow. Asking my Swedish colleagues, I could not get a decent answer, it's all the same UK story about prices constantly either going up or being steady. So I understood that some local people got brainwashed here too and hej-hej: UK property porn programs are on all the time.

 

Given that this site attracts a healthy amount of independently thinking people, I decided to through in a couple of questions:

1. What is a healthy mortgage/annual income ratio here.

2. Are there any underlying problems in the Swedish economy, society and is there anything to watch out for?

 

My move to Sweden is temporary but I am really seriously thinking about making it permanent.

 

Should there be any Swedes or people who emigrated to Sweden in the past, then I would deeply appreciate your comments.

 

Many thanks in advance / Tack så mycket!

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Are you thinking of buying then?

 

If so, try and get hold of a chart that shows prices going back 20 years or more.

 

That may help you determine where prices are in the 18 year cycle.

It is generally: 14 years up, and 4 years down.

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Data per m2 going back to 1996 is here - http://www.maklarstatistik.se/maeklarstati...r&Ant=15004

 

If you dont know swedish which I guess is most of you then the graph is for apartments, click Villa if you want houses and fritidshus is you want the typical swedish summer house in a remote place near a lake.

 

One interesting thing to recently happen in the Swedish housing market is that the government imposed a maximum loan to value of 85%.

 

The story (in english) is reported here - http://www.thelocal.se/27700/20100709/

And some opinions about its effect after a few months here (in english) - http://www.thelocal.se/31700/20110128/

 

Many Swedish towns are dominated by large engineering companies (Sandvik, ABB, SSAB etc). Due to Chinese exports many are doing really well, last quarter GDP growth was an amazing 6.9%. Thats right nearly 7% its not a typo. http://ktwop.wordpress.com/2010/11/29/swed...-levels-at-6-9/

 

There was a slight dip during the credit crisis but thats all. As far as most people are concerned the credit crunch has passed and its all over and house prices are up again. The government even has a surplus and plans to start cutting taxes again.

 

One of the largest listed house builders is JM. It put some sites on hold during the credit crunch but its full steam ahead now. Here is the price chart -

http://finance.yahoo.com/echarts?s=JM.ST+I...=0;logscale=off

 

Once good thing about Sweden is that all the legal rights are with the tenant so there is just no reward for being a landlord and BTL e.g. rent can only increase by the collective bargaining agreements in which local governments play a part. Landlords tend to be local authorities or pension funds i.e. its no a get rich quick scheme. Prices are also limited due to large amounts of land for sale outside the towns.

 

Sensible Swedes.

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Data per m2 going back to 1996 is here ....

 

 

Very many thanks, DP, for this post and for the PM. I truly appreciate this. Apologies for not replying sooner I am just so busy at the new place... running like a headless chicken; however, just 2.5 months later I like it even more here.

 

I am finding the links with the stats being particularly interesting and am going through them rather slowly. Swedish is still a problem but I am making some progress. Local.se is a great source of information in English though.

 

 

Many Swedish towns are dominated by large engineering companies (Sandvik, ABB, SSAB etc). Due to Chinese exports many are doing really well, last quarter GDP growth was an amazing 6.9%. Thats right nearly 7% its not a typo. http://ktwop.wordpress.com/2010/11/29/swed...-levels-at-6-9/

 

There was a slight dip during the credit crisis but thats all. As far as most people are concerned the credit crunch has passed and its all over and house prices are up again. The government even has a surplus and plans to start cutting taxes again.

 

It was the engineering business that brought me here and I am amazed how many companies and industries are here. It looks very prosperous and pleasantly busy in comparison to the UK.

 

I am not sure about the "slight dip" though. I've heard quite a few unpleasant stories about 2008 and I am just somewhat worried how it might play out if the second leg of the downturn comes around. All of the car, lorry, tractor & boat manufacturers as well as the mining and processing industries might (just might) find it hard to go through it and the strong kroner is not going to help if/when the global economy sends its "present" across to the Swedish shores.

 

One of the largest listed house builders is JM. It put some sites on hold during the credit crunch but its full steam ahead now. Here is the price chart -

http://finance.yahoo.com/echarts?s=JM.ST+I...=0;logscale=off

 

Nice double top and not far from the upper part of the ascending channel.

 

Once good thing about Sweden is that all the legal rights are with the tenant so there is just no reward for being a landlord and BTL e.g. rent can only increase by the collective bargaining agreements in which local governments play a part. Landlords tend to be local authorities or pension funds i.e. its no a get rich quick scheme. Prices are also limited due to large amounts of land for sale outside the towns.

 

True, and it would make a perfect sense for me to continue renting for a bit longer. Apartments are very spacious and seem to be fairly affordable 3-4 times annual income. The houses in the cities or by the sea are fairly expensive. When I have a bit more time I will try to follow DrBubbs recommendations and review the historical price and price/(annual earnings) ratios just to see where the market is likely to go from here.

 

 

Sensible Swedes.

 

They are indeed and I really like them. Always did.

 

Tack så mycket!

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I'm not Swedish but my partner is Danish and last year we were both considering jobs in Sweden - but in the end decided against it for various reasons. We spend a fair amount of time at a place near Copenhagen that we rent, over looking the bridge to Sweden and the Kattegat. Eventually we may buy somewhere in Copenhagen or more generally the Oresund region, which includes Southern Sweden (now conveniently connected to CPH by the aforementioned bridge).

 

When we were considering the job offers I found this quite useful:

 

http://www.thelocal.se/

 

It has a property section and some links. Not maybe the most reliable source you may think but a year or so ago I found it quite useful. I discovered that whilst there has been price inflation over the last five years, outside Stockholm it was quite moderate compared to the UK.

 

You might know the paper already but if you don't it may be generally useful as a way of keeping up with the Swedish news.

 

A big problem, as I'm sure you know, is that the Swedish Kroner has strengthened considerable against the £. Until a few months ago the Swedish Kroner was weak, one of the few currencies that the £ was doing OK against - largely I think because the FX markets were worried about Swedish bank exposure to Baltic country debt. That seems to have abated and, combined with the industrial success that Don't Panic rightly points to, the £ has shrunk against the SK of late. But debt worries might return depending on whether there is another outbreak of credit market problems. Exports also make the industrial upturn dependent on emerging markets (China but also in the Swedish case, South America).

 

I agree the Nordic countries have something special that makes them attractive as places to live. Good luck!

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Before buying property in Sweden I suggest you check out the tax laws on property. It might surprise you...to the downside!

 

Can you be a bit more specific and/or direct to a site with up-to-date information?

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