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New regulations drag down Stockholm real estate sales
With a steep decline in condo prices following the implementation of new rules by the Financial Supervisory Authority, Grassroots sought to uncover what was affecting the Stockholm real estate market by speaking directly with residential brokers.
To assess the real estate market for condos in Stockholm, Grassroots® commissioned interviews with brokers who deal in residential sales. Sources cited a sharp decline in condo sales after March 1, 2018, due to the strong impact of the new FSA Financial Supervisory Authority (FSA, or Finansinspektionen) regulations, which make it more difficult for buyers to buy, and due to the unwillingness of sellers to sell at lower prices, although sources cited high numbers of transactions prior to March.
Among sources who commented, sales of condos in the sub–EUR 1 million (USD 1.18 million) price range are down for most in 2Q 2018 year-to-year due to the new FSA amortization regulations, longer transaction times, sellers pulling inventory off the market because they are reluctant to sell at lower prices and a slowdown in the new-condo market, while they are flat or up for almost none. Sales of condos in the EUR 1 million–EUR 3 million (USD 1.18 million–USD 3.54 million) price range are down for slightly more than two-thirds, flat for slightly less than one-fourth and up for almost none. Sales of condos in the above EUR 3 million price range are flat for slightly more than half, down for one-third and up for a few.
One source said, “The FSA amortization requirements are particularly hard on new buyers. Young people can’t meet the loan requirements and pay back the higher mortgages. Banks are requiring owners to sell first before getting a loan for a new condo. Because owners are not getting the prices they want, they are taking their condos off the market. Before, we had several bidders interested in a listing; now, it’s usually just one.”
Regarding pricing, among sources who commented, prices of condos in the sub–EUR 1 million price range were flat for two-thirds in the past three months, down for one-fourth and up for almost none. Prices of condos in the EUR 1 million–EUR 3 million price range were flat for slightly more than two-thirds, while they were down or up for a few. Prices of condos in the above EUR 3 million price range were flat for slightly more than three-fourths, while they were down or up for almost none.
Looking ahead, among sources who commented, three-fourths expect sales of condos in the sub–EUR 1 million price range to trend flat in the next 12 months, as desired inventory may return to the market and developers will have to accept lower prices for condos in new buildings, while a few said down, and almost none said up. Slightly more than two-thirds expect sales of condos in the EUR 1 million–EUR 3 million price range to trend flat, while slightly less than one-fourth expect them to trend down because new regulations make it more difficult to buy a house or apartment, and almost none said up. Two-thirds expect sales of condos in the above EUR 3 million price range to trend flat, while slightly less than one-fourth said down, and a few said up.
One source said, “Today’s real estate market won’t change anytime soon. Developers are going bankrupt, because they can’t sell their new units, and this will put pressure on keeping prices at their current levels. Furthermore, with the upcoming fall elections in Sweden, there is some uncertainty as to whether the new government will make changes in the FSA’s current amortization regulations.”
Grassroots® Research is a division of Allianz Global Investors that commissions investigative market research for asset-management professionals. Research data used to generate Grassroots® Research reports are received from independent, third-party contractors who supply research that, subject to applicable laws and regulations, may be paid for by commissions generated by trades executed on behalf of clients.
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