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‘Sweden next in line for housing market crash’

Sweden tops a list of countries that risk suffering a housing market crash, Germany's Commerzbank has warned, citing the slackening off of Swedish property prices as a harbinger of a potential downswing.

Published: 17 May 2013 16:42 CEST

'Sweden next in line for housing market crash'

'Sweden next in line for housing market crash'

The bank has analyzed housing prices across Europe and looked at boom-bust cycles in the US in the past 15 years.

“The property booms in Finland and in Sweden seem to be nearing their end, and we should soon see a price correction,” Commerzbank said in a statement on Friday, according to the NyhetDirect news service.

“Both countries have seen housing prices increase rapidly over the past ten years, but that increase has begun to level out since the beginning of 2010.”

Commerzbank said the slowing down of property-price hikes often precedes a downturn in housing prices.

The bank also noted the high levels of household debt and prices in relation to rents are moving laterally, but that the levels are far higher than long-term trends.

“The drop in housing investments is already affecting the economies in both countries, a process that will probably accelerate when house prices start to fall,” wrote Commerzbank.

Europe-wide, property prices were already sinking in France, Spain, the Netherlands and Slovenia, with indications that prices will continue to drop. Commerzbank said the level of house-hold indebtedness and prices compared to rents in these countries were far above the level expected in the long-term.

Danish and British property prices, meanwhile, had emerged from the bust and were slowly climbing, while Ireland was in a stabilizing phase.

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How to buy your own Swedish island

How can I find an island for sale?

Perhaps surprisingly, you can find islands for sale in the same places you find other properties in Sweden, for example on property site Hemnet, or directly through an estate agent.

As you may expect, people who own their own islands often want to hang onto them, so they don’t come up for sale very often.

If you’re still interested in finding your dream island, then try searching egen ö till salu (own island for sale), and be prepared that you’ll probably have to wait a while before one comes up in your ideal area.

You might also get lucky and be able to find a property which just happens to include a small island with it (for example, a property by a lake or by the sea), but there’s no guarantee that the island would be big enough to actually do anything with – and if it is, the price of the property would no doubt reflect this.

Can I build on it?

Islands usually fall into two categories: those where there is already some sort of house or building (like a lighthouse, for example), and those which are completely untouched.

Bear in mind that the rules on building on islands are pretty strict. Firstly, you’ll need to apply for planning permission (yes, even if you own the whole island), which can be difficult.

Essentially, all Swedish coastlines are protected under strandskyddet (literally: “beach protection”), which means that they must be accessible to the public and cannot be built on or fenced off for private use. The exact area which must be protected varies, but as a general rule you’ll have to keep the shoreline accessible 100 metres inland – going up to 300 metres in some cases.

Under allemansrätten, the right to roam, members of the public must be able to access the coastline, so even if you have your own island which you build your own jetty on, you can’t stop people from turning up and mooring at your jetty to lounge on the rocks.

The only exception to this is if they’re so close to your home they disturb your hemfrid, literally “home peace”, for example if they’d be able to see into your property or would feasibly intrude on your private life.

The downside to this hemfrid rule is that it can sometimes get in the way of planning permission – if a rebuild or extension to your home would extend your hemfrid so much that it would encroach on the public right to access the coastline (even if it’s something as simple as putting in larger windows or building a small veranda), then your application could be rejected.

So essentially, you might need to forget about your dreams of a supervillain-style lair on your own private island.

How much does it cost?

Island prices vary wildly, depending on things like the size of your island, how close it is to a major city, and whether it has buildings or pre-approved planning permission.

Expect to pay a couple million kronor for a larger island (like this one) close to Stockholm or Gothenburg (yes, even if you can’t build anything on it).

Lilla Kattskäret, an island in Norrtälje around an hour from Stockholm with a handful of small buildings and two separate jetties, sold in August for just under 10 million kronor.

If you’re right in the middle of the city centre, you might see islands listed with no price at all, like this island complete with summer house, guest house and another, smaller island. A stone’s throw from Drottningholm Palace – the home of the Swedish King and Queen – this might be a case of “if you have to ask how much it costs, you probably can’t afford it”.

And don’t forget – you’ll need your own boat to access it, too.

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