Having encountered the peculiar Swedish laws and traditions, foreigners lost interest in Swedish real estate
Apartments are not sold individually
The real estate market of Scandinavian countries remains Terra Incognita for the Russian buyer. True, residents of St. Petersburg are trying to explore the border areas of Finland, and some agencies offer houses in the Norwegian fjords. But Sweden is not yet represented in advertising or at exhibitions. Only occasionally do news come from there about the debts of the Swedish king, or about the wedding of the Swedish princess. As for what is happening with local real estate and whether it can be invested in, practically no information comes. Therefore, the online real estate magazine Metrinfo.ru decided to shed light on this dark corner of Europe.
As Dmitry Erikson, an employee of the Swedish company «НusPаSjоn», told us, the most expensive real estate is located in Gamla Stan, the historical center of Stockholm. It, like Moscow was once ringed by a line of outposts, but if our Abelmanovskaya outpost became only a historical concept, then in the Swedish capital they have been preserved and separate the center of Stockholm from the rest of it.
The center of the Swedish capital is occupied by historical buildings of medieval construction. Due to the fact that Stockholm was never captured by an enemy, all these buildings have been preserved. True, in July 1719 the northern part of the city suffered from artillery shelling by the Russian fleet, but this did not affect the architectural appearance of Stockholm. Among the monuments of medieval architecture, the Romano-Gothic churches of Storkyrkan and Riddarholmskyrkan, built in the 13th century, are especially noticeable.
Within the ring of outposts, a standard two-room apartment – and the standard here is 48 square meters – costs 3 million Swedish kronor, which is approximately $350,000 or €273,000. True, individual apartments are sold extremely rarely, and this price is calculated theoretically. The fact is that in Sweden city houses are mostly cooperative, and to sell or buy an apartment, the consent of the cooperative is required.
Apartments can be sold as part of an entire income-generating building being sold, and they are purchased not for personal living, but for renting out. Moreover, the Swedes themselves will not rent in the center – the prices there are prohibitive for them. Apartments in the center are offered mainly to tourists.
The service sector is deflating, tourists no longer feed
The absence of heavy industry makes Stockholm one of the cleanest cities in the world. However, this same factor, according to Dmitry Erikson, has led to the fact that 85% of residents work in the service sector. But due to the crisis, Stockholmers have begun to use hairdressers less often, take taxis less, and choose cheaper restaurants. So the service sector was the first to suffer.
The influx of tourists, which always fed this sector, also sharply decreased. According to the portal Stockholmbusinessregion.se, in 2007 Stockholm was visited by 7.5 million tourists. Last year, their number decreased to 6 million people, which corresponds to the level of 2004.
The only saving grace is that in the last decade a huge number of jobs have been created in Stockholm in companies that develop and implement the latest technologies. World-famous IBM, Ericsson, and Electrolux are based here. In the north of Stockholm, in the Kista area, there is a solid IT center. True, the jobs in this sector have been taken by labor migrants, and now the Swedes themselves cannot get a job there.
All these negative factors forced the Swedes to compensate for the losses caused by the crisis by increasing the cost of services. This could not but affect rents as well. Thus, the rent for a standard apartment in the old town now costs 10,000 Swedish kronor, which at the current exchange rate equals €909 per month.
The employer is always the fall guy
This practice is carried out either by vаrden – the landlord, or by Kooperativa boende – the cooperative of owners. However, in both cases, when concluding a contract with the cooperative, you must fill out a detailed questionnaire, which includes, for example, the following item: Arbetsgivares telefon – your employer's phone number. That is, if you are late with the rent, the cooperative will pester not you, but your 'arbetsgivare'. The latter, by the way, is responsible for everything: for your health, for your safety, and even for your creditworthiness. If an employee is in debt on a mortgage, the amount of the missing payment can be deducted from the employer's account administratively, after which the employer will withhold it from the employee's salary for years.
If the employer does not give the employee a certificate from the place of work, he can request it through the labor inspectorate, which will also check how reliable the information indicated in the certificate is. Since salaries here are received through a bank, this information is quite transparent. Therefore, to avoid problems, the employer often prefers to provide the employee with company housing. If the employee is a foreigner or simply from out of town, the employer is obliged to provide company housing that meets all sanitary standards by default.
Swedish queue for cheap housing
Affordable rental housing in the Swedish capital is in short supply. Over 200,000 people are on the waiting list for it. The queue, however, can be bypassed by renting an expensive apartment for 10-12 thousand kronor per month – €900-1,100. But considering that the average 'Stockholmer' earns 28,000 kronor (?2,500) per month, the limit of his possibilities is a rental rate of 5,000 kronor per month.
To get on the waiting list, you must register electronically on the portal Bokabostad.stockholm.se. The apartments on the waiting list cost about 3,500 kronor (?320) per month. In addition, a certain initial deposit is required – on average 500 kronor (?45). As a result, the situation is this: while waiting for cheap rent, Swedes live in an expensive apartment.
You can rent it without intermediaries through the portal Bostad.stockholm.se. For example, 79-square-meter two-room apartments (Lаgenhet) in the Kofoten quarter are offered today for 8,408 kronor per month (?764). Three-room apartments (97 sq. meters) – for 11,563 kronor (?1,050).
Houses did not rise or fall in price
Not only tourism in Sweden has fallen to the level of 2004. Real estate prices have also fallen to that level. However, in Sweden there was no sharp rise in real estate prices – a jump was observed only in 1995, when Sweden, having joined the European Union, was forced to allow foreigners to purchase real estate. But foreigners, faced with peculiar Swedish laws and traditions (cooperative ownership, strict state control over landlords – more on this below), lost interest in Swedish real estate.
Due to the lack of a sharp jump in recent years, the fall was not a collapse. Having risen by 20-25% over 2004-2008, prices smoothly dropped over six months. For example, a modest villa that cost €600,000 five years ago rose in price to ?750,000, then fell back to €600,000, but was never sold over five years. The Swedes themselves view the return of prices to the original level as a positive phenomenon.
Even the king was denied a mortgage
Future borrowers are carefully checked: whether they have debts, a criminal past; whether they have a job, inheritance or other capital; what their monthly income is. Loans are more readily given to couples than to singles. It does not matter whether the couple consists of a man and a woman, two men, or two women. The very fact of joint housekeeping is important, which is checked by inspectors. The minimum annual income to qualify for a mortgage is now 320,000 kronor (?29,000). Mortgages are mainly issued for 10 years. The mortgage rate is 5.19%, and for refinancing – 4.96%.
As Igor Indriksons, head of the international investment department at IntermarkSavills, said, Sweden is one of the countries with a classical banking system. Unlike the banking system of English-speaking countries, where a bank can resell its debts to hedge funds and again receive funds to issue new loans, Swedish banks can only use funds deposited by the population.
Therefore, getting a mortgage in Sweden was difficult even before the crisis, and now it has become almost impossible. Recently, even the Swedish king Carl XVI Gustaf of the Bernadotte dynasty was denied a loan.
Apartments are rarely sold separately (though the author found four such listings). Therefore, mortgages are issued for the purchase of a villa or part of it. Villas are located 20-25 km from Stockholm, and their residents travel to the city limits in 15-50 minutes, and to the city center in about 40 minutes.
However, mortgage payments, which roughly correspond to the rent for an expensive apartment, are supplemented by utility payments, which amount to 7,000 kronor (?636) per month for a 140-square-meter villa. After saving for half a year on food and gasoline (many Swedes switched to bicycles during the crisis, and public transport is expensive for them – 15 kronor or €1.36 per ride), the Swede concludes that part of the house must be rented out. But by law, he cannot do this just like that, and he applies to the Housing Exchange. But here another unpleasant surprise awaits him: the exchange limits his appetite with a price maximum, and the homeowner's income is barely enough to break even on mortgage and utility costs, and sometimes he has to add his own money.
And then the former law-abiding Swede begins to break the law and rents out part of the house without any exchange through black brokers (svart anka), who find tenants among illegal immigrants. Mostly – Estonians and Latvians who have lost their sources of income at home.
So what can we advise our investor in the end? You can only venture into Sweden with large sums of money. The best investment would be an income-generating building – with such a rental shortage, it will always be provided with tenants. At the same time, you should not particularly count on a mortgage – it is in short supply in Sweden.
Sergei SHUMAKOV.
Metrinfo.Ru