Country Guides Country Guide: Sweden

Date Published:

02/06/2008

Sweden is the biggest country in Scandinavia, and the fourth largest in Europe, with a population of nine million- Britain, by comparison is home to 59 million people who live in an area half the size of Sweden.

The Market

Commonly perceived to be expensive and cold, in truth the cost of living in Sweden is higher than Britain's but property prices are lower, and its temperature is hotter in the summer than the UK's and not as wet in winter.

A member of the EU, although like Britain it has not adopted the euro as its currency, Sweden's GDP per capita is approximately 15% above the EU25 average, placing it well within the 10 wealthiest nations in Europe. The cost of living is high by UK standards, but property prices are surprisingly low with country cottages priced from €40,000 (£27,500) and villas from €100,000 (£69,000).

In the major cities of Stockholm, Gothenborg and Malmo, property prices, naturally, are more expensive as there is greater demand for real estate. Approximately 20% of Sweden's population live in greater Stockholm located on the Baltic Sea, at the entrance to Lake Malaren. Built on 14 islands, the city is home to stunning waterside buildings, many of which have been gentrified in the past decade.

Gothenburg, on the west coast, is a major port and industrial centre. It's also home to a world-class opera house, and has a lively down town area. Malmo, on the south coast, arguably has the greatest economic potential of all Sweden's cities following the completion of a 16 kilometre-long bridge and tunnel linking it to Copenhagen, Denmark.

Kate Godfrey, head of research at agents Property Frontiers selects the city as her one to watch. "Malmo, just across the Oresund from Copenhagen, is a hot tip," she says. "The city has benefited from the opening of the bridge as workers have chosen to live in Malmo and commute to Copenhagen, where house prices are dearer."

The disparity between the neighbouring countries' house prices is explained by the fact that historically Swedes have tended to rent rather than buy property, as Godfrey explains. "Most people rent and in the cities the relationship between supply and demand is one of the most favourable available anywhere in the world," she says.

"In Stockholm people often stay on housing lists for five years before finding something suitable. The downside is that the rental market is over-regulated, and rents have been kept artificially low, but vast numbers of properties are now being sold to the private sector and rents in the cities should rise fast."

The effect in 2004 was capital growth of 7.6% on the back of property price increases of 81% between 1997 and 2004- a better performance than in France, Italy, New Zealand or the USA. House price inflation for 2006 was another robust year, beating the UK with an 11% rise, leading analysts to consider that the property market has yet to peak and is worth speculating on in 2008 and beyond.