Swedish property market troubled by sharp drop in sales: mortgage lender
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E-mail Xinhua, September 2, 2023
STOCKHOLM, Sept. 1 (Xinhua) -- Sales of off-plan and newly built property have plummeted in Sweden, and a majority of buyers now cancel their purchases before moving in, a leading mortgage lender said on Friday.
In the second quarter of this year, sales dwindled to less than 25 percent of the level prior to May 2022 when Sweden's central bank, the Riksbank, started raising key interest rates, state-owned SBAB Bank said in a press release.
"The situation regarding sales of newly built homes is disastrous," SBAB Bank's Chief Economist Robert Boije said, adding that for newly built homes that eventually find owners, the average sales process has now doubled in duration.
Meanwhile, the bank noted a dramatic increase in buyers withdrawing from purchase contracts, as nearly two-thirds of those who committed to off-plan and newly built properties finally chose to cancel, even at the expense of their down payment.
As a consequence, a further drop in housing prices can be expected, Boije said. "Based on the updated price lists, the proportion of homes that are reduced in price is now 6 percent, a figure that will probably increase in the fall when the companies need to sell unsold stock to improve their liquidity."
Furthermore, Boije said that the 6-percent figure is likely a conservative estimate, as many prospective buyers are offered substantial discounts over the phone. This economic downturn has also led to a sharp decline in new housing construction to a level not seen in a decade.
During the first six months, the number of new construction projects decreased by 57 percent compared to the same period in 2022, Statistics Sweden said last week, adding that an even sharper decline, around 63 percent, was seen in the largest cities.
Data released on Friday by Swedish business and credit reference agency UC showed that during the first eight months, slightly over 1,000 companies in the building and construction sector went bankrupt, marking a 35-percent year-on-year increase. Enditem
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