Some of my thoughts regarding the housing market, they come from both observing the market and from first hand experience by selling in Sept 2017.
- A widespread mindset of people living in Stockholm has been that the housing prices will continue upwards because they have been doing so for 15+ years. A change to this mindset was starting to be noticed in the spring of 2017 and recently rapidly changed. 66% believed in rising prices in September 2017 compared to 43% in October[1].
- The time it takes to sell an apartment in Stockholm is up from ~3-4 days to weeks.
- It was previously possible to earn $10k - $50k by flipping a newly produced apartment. This was done by commiting to buy the apartment when it is finished by paying a deposit and then sell it when you get the keys. This opportunity ceased to exist around the end of 2016.
- Trusted sources such as Svensk Mäklarstatistik[2] and Valueguard[3] indicate that the fall in prices is around 3% - 5% this far. Untrusted sources[4] indicate that the fall is above 10%. Trusted sources uses formulas to give better stability to their indexes, but they also react slower than the untrusted sources due to that. I suspect that untrusted sources also use data points that are removed even though they failed to close the deal.
- The difference between renting and cost of ownership is still huge, would estimate a 400% increase in interest rate would make the costs about even.
- About 56 250 (24.96% of total) people aged 20 - 27 in Stockholm are still living with their parents even though they would like to move to their own place. In the central parts of the city this share is above 60%. [5]
- Rising prices, difference between renting and cost of ownership and flipping of newly produced apartments has attracted a lot of people that invest/speculate in buying and renting out. They have probably not realized until now when the prices start to dip that they are sitting with a huge leverage on their investment/speculation and what risk that comes with. So they are probably the first ones to panic.
- Production of new apartments has exploded in Sweden the last 2 years, most of these are quite expensive which might have saturated the higher end of the market.
- The increase of prices has acted as jet fuel for different industries since a lot of people feel rich, increase their mortgage and consume the money. Companies that work with home makeover will be the first to get hit, but new car sales will also dip.
With this said I cannot be other than uncertain about the direction of the market, there are still a lot of things that indicate that the prices will increase (cost of ownership vs rent, demand for housing, interest rate prognosis). But if the market keep going down I am quite certain that it will drag a lot of other stuff with it and become a self fulfilling prophecy.
Edit: Sorry for a lot of typos and language that could be improved, just did a brain dump in a rush.
- A widespread mindset of people living in Stockholm has been that the housing prices will continue upwards because they have been doing so for 15+ years. A change to this mindset was starting to be noticed in the spring of 2017 and recently rapidly changed. 66% believed in rising prices in September 2017 compared to 43% in October[1].
- The time it takes to sell an apartment in Stockholm is up from ~3-4 days to weeks.
- It was previously possible to earn $10k - $50k by flipping a newly produced apartment. This was done by commiting to buy the apartment when it is finished by paying a deposit and then sell it when you get the keys. This opportunity ceased to exist around the end of 2016.
- Trusted sources such as Svensk Mäklarstatistik[2] and Valueguard[3] indicate that the fall in prices is around 3% - 5% this far. Untrusted sources[4] indicate that the fall is above 10%. Trusted sources uses formulas to give better stability to their indexes, but they also react slower than the untrusted sources due to that. I suspect that untrusted sources also use data points that are removed even though they failed to close the deal.
- The difference between renting and cost of ownership is still huge, would estimate a 400% increase in interest rate would make the costs about even.
- About 56 250 (24.96% of total) people aged 20 - 27 in Stockholm are still living with their parents even though they would like to move to their own place. In the central parts of the city this share is above 60%. [5]
- Rising prices, difference between renting and cost of ownership and flipping of newly produced apartments has attracted a lot of people that invest/speculate in buying and renting out. They have probably not realized until now when the prices start to dip that they are sitting with a huge leverage on their investment/speculation and what risk that comes with. So they are probably the first ones to panic.
- Production of new apartments has exploded in Sweden the last 2 years, most of these are quite expensive which might have saturated the higher end of the market.
- The increase of prices has acted as jet fuel for different industries since a lot of people feel rich, increase their mortgage and consume the money. Companies that work with home makeover will be the first to get hit, but new car sales will also dip.
With this said I cannot be other than uncertain about the direction of the market, there are still a lot of things that indicate that the prices will increase (cost of ownership vs rent, demand for housing, interest rate prognosis). But if the market keep going down I am quite certain that it will drag a lot of other stuff with it and become a self fulfilling prophecy.
Edit: Sorry for a lot of typos and language that could be improved, just did a brain dump in a rush.
[1] http://www.privataaffarer.se/bostad/seb-hushallens-boprisfor...
[2] https://www.maklarstatistik.se/omrade/riket/stockholms-lan/s...
[3] http://www.valueguard.se/stockholmbr
[4] https://husmask.se/kommun/stockholm/
[5] https://www.svd.se/en-tredjedel-av-stockholms-unga-tvingas-b...