Buying a property in Stockholm: a complete guide

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Yes, the analysis of Stockholm's property market is included in our pack

Thinking of buying a property in Stockholm? You're not alone!

Many people are enchanted by Stockholm's Scandinavian beauty and dream of owning a waterfront property or a modern city apartment there.

Would it be a good investment, though? Are property prices increasing in Stockholm? How much does it cost? Is it better to invest in Östermalm or Södermalm? Are there any hidden fees? What yields can I expect?

In this article, everything is sorted out for you.

The Investropa team knows this market like the back of their hand. As a matter of fact, we've compiled all our findings in one pack. Get it now.

In the lines below, we will share some of this knowledge.

How's the property market in Stockholm?

Are property values increasing or decreasing? Let's check the latest data and statistics.

Types of properties

In Stockholm, there are various types of properties available for sale, including apartments, condominiums, townhouses, and single-family homes.

Apartments are commonly found in multi-story buildings and offer compact living spaces, while condominiums provide similar features with added ownership benefits. Townhouses offer a mix of privacy and community, often arranged in rows, while single-family homes provide more space and independence.

Each property type offers different lifestyles and amenities, catering to a range of preferences and budgets in the diverse real estate market of Stockholm.

Should you buy or rent?

(If you plan to use it yourself and not as a rental)

If Stockholm is your home or future destination, you may be pondering the buy vs. rent dilemma in this picturesque capital city of Sweden.

Without a doubt, you should buy if you want to acquire equity and have more control over your living environment.

Actually, decisions become clearer with the property price-to-rent ratio in mind. You can think of it as the time it takes for rental income to equal the property's current purchase price.

According to Numbeo, the property price-to-rent ratio in Stockholm is around 35.65, which is significantly above the world average.

It indicates that buying a property is more expensive in the short term compared to renting. However, buying can still be a viable option if you plan to live in Stockholm for an extended period or if you think property values will increase.

Property prices in Stockholm

On average, according to the last reported data from Valueguard, purchasing a property in Stockholm should cost you around $8,200 per square meter.

There are significant differences, clearly. The value of a square meter for a city-center apartment in Stockholm might differ from a suburban home in Solna. You'll get a more detailed in our pack for buying property in Stockholm and in Sweden.

To give you a better idea, it is similar to the prices you can find in a city like Hamburg.

Also, housing prices in Stockholm are 6% cheaper than in Oslo.

The most expensive neighbourhoods in Stockholm are probably Östermalm, Djurgården, and Lärkstaden, while the cheaper neighbourhoods are likely in the outer parts of Stockholm.

Trends

First and foremost, we have to acknowledge that Sweden is, today, an extremely stable country. The last Fragile State Index that has been reported for this place is 20.9.

It is something to have in mind when wondering whether it's a good investment to buy a property in Stockholm.

Also, according to the IMF’s forecasts, Sweden's economy is expected to soar by 6.6% in the coming 5 years, resulting in an average GDP growth rate of 1.3%.

If you intend to invest in real estate in Stockholm it's a good thing because when the economy grows, people tend to become wealthier, which usually results in higher housing prices.

Also, in Sweden, the average GDP per capita has changed by 4.7% over the last 5 years. Despite being minimal, there is still some observable growth.

However, if we check the UBS Global Real Estate Bubble Index, we can see that the Stockholm property market is currently quite overvalued (the index is at 1.22, above 0.5 means overvaluation).

Looking for more updated data? We've done a big-picture study to find out if it's a good idea to purchase property in Sweden right now.

Buying property in Stockholm

Buying real estate in Stockholm can be challenging due to the difficulty of obtaining reliable and up-to-date information. That's why we have created the pack to buy property in Stockholm and in Sweden.

Buying process

In our pack, we've explained the entire buying process in detail. We've provided clear information about prices and yields based on the area, guidance on negotiating the price, and options for securing a mortgage.

Now, we're offering you a simpler version, step-by-step, to make it easier for you to grasp.

This is the step-by-step process to purchase a property in Stockholm:

1. Research the Stockholm property market and set a budget.
2. Engage a licensed real estate agent familiar with Stockholm's regulations.
3. Search for suitable properties in specific Stockholm neighborhoods.
4. Attend property viewings and consider factors like proximity to public transport and green spaces.
5. Make an offer through your agent, usually including a bank statement proving financial capability.
6. Negotiate the price and terms, taking into account the Swedish property-purchase tax (stamp duty).
7. Sign a preliminary purchase agreement (Bokning) and pay a deposit (10% of the property price).
8. Conduct a thorough property inspection and review legal documents such as the Lantmäteriet plan (official property survey).
9. Secure financing through a Swedish bank or mortgage lender.
10. Finalize the purchase contract (Köpebrev) with a notary, ensuring compliance with Swedish property laws.
11. Pay the remaining balance and additional fees like registration fees and real estate agent commissions.
12. Complete the property transfer by signing the title deed at the Swedish Land Registry (Lantmäteriet) and pay the property-purchase tax (stamp duty) before taking possession.

Also, if you're not from the country, you might want to check our article on how to buy property as a foreigner in Sweden.

Make a profitable investment in Stockholm

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Where to find a property

Discover properties in Stockholm with the help of these websites:

• RE/MAX - Providing information on real estate and geography in Sweden for the public sector, businesses, and individuals.
• Sweden Estates - A global real estate marketplace offering homes and properties for sale in Sweden.
• Sotheby's International Realty - Offering luxury homes for sale in Sweden, including estates, apartments, and waterfront properties.
• Realting - An international real estate platform offering residential and commercial properties in Sweden, along with news and immigration-related information.
• Properstar - Providing luxury properties for sale in various locations in Sweden, including houses, apartments, and farms.

Also, know that we have included contacts of real estate agencies, property lawyers, moving companies, expats communities and more in our pack for buying property in Sweden.

What you can get

As mentioned before, the average price per sqm in Stockholm is $8,200. A 1-bedroom property of 60 square meters would cost approximately $492,000, and a 2-bedroom property of 85 square meters would cost approximately $697,000.

However, the cost of properties will fluctuate depending on both their characteristics and their location.

Typical neighborhoods in Stockholm usually come with higher price tags. In Östermalm, a residence might cost approximately $1,990,000, while a house in Södermalm could be priced at $1,440,000.

However, some places cost less. You might encounter an apartment in Farsta for $270,000, or you could discover one in Hägersten priced at only $220,000.

Find a more detailed breakdown in our full pack for buying property in Sweden.

Risks and pitfalls

Here are the main pitfalls when buying property in Stockholm, Sweden:

• Housing Co-operatives (Bostadsrätt): Ownership model with potential conflicts among residents and restrictive bylaws.
• Building Permits: Lengthy approval process for renovations or extensions can cause delays and cost overruns.
• Right of First Refusal (Lagfart): Sellers must offer the property to the municipality first, prolonging the sale process.
• Mortgage Rate Fixation: Fixed mortgage rates may result in higher costs if interest rates decrease.
• Winter Conditions: Harsh winters may lead to higher maintenance costs and weather-related damages.
• Allemansrätt: Public access rights may affect privacy or land usage near certain properties.
• Property Tax: Rates vary by municipality and can substantially impact the overall ownership cost.
• Historical Buildings: Special permits and regulations apply, limiting modifications and requiring preservation efforts.

We don't want this to happen to you, so we have included a full checklist for your property investment in our pack of documents. Avoid these mistakes and save a lot of money.

Everything you need to know is included in our Sweden Property Pack

Living in Stockholm

Living in Stockholm is an exciting and vibrant experience, with plenty of cultural attractions, excellent public transport, and a high quality of life.

Cost of living

The cost of living in Stockholm is generally high due to the city's popularity and high wages. However, the quality of life is also high, with excellent public transportation, healthcare and education.

Here are some examples to better understand the cost of living in Stockholm, Sweden:

• A fika with a kanelbullar (cinnamon bun) at a local café: $5-$7.
• Rent for a one-bedroom apartment in the trendy Södermalm neighborhood: $1,500-$2,500 per month.
• Monthly SL public transportation pass for zones A and B: $90-$120.
• A bottle of Swedish mineral water (e.g., Ramlösa) at a grocery store: $1-$2.
• Utilities (electricity, heating, cooling) for an 85m² apartment in Stockholm: $120-$180.
• A lunch of Swedish meatballs (köttbullar) at a traditional restaurant: $15-$20.
• Entrance fee to the Vasa Museum, a unique maritime museum: $15-$20.
• Health insurance coverage for a family of four: $300-$500 per month.

Neighbourhoods and spots

Since we want to make information friendly for readers, we made a table that shows the neighborhoods in Stockholm. For yields, prices and rents, check our property pack.

Life in Stockholm

The economic landscape in Stockholm is largely positive, with the city's economy being driven by its strong service sector, as well as its technology and financial services industries. The city has a low unemployment rate and is home to many international companies, making it an attractive destination for foreign investment.

Upon reviewing the IMF's data, Stockholm's GDP contributes to almost 27% of Sweden's GDP. Picking property in a well-off city is a wise move because of more jobs, high demand for homes, and property values that stay stable.

What expats usually like the most in Stockholm are the lush green spaces, such as the Royal National City Park, and the charming cobblestone streets of the Old Town.

However, the crime rate index of Stockholm, which is around 46, is not great, which is something to take into consideration if you're thinking about living there. Examples of crimes in Stockholm include theft, burglary, drug-related offenses, assault, and vandalism within the local population, although these types of crimes rarely affect the expat population.

A good point for a property investor - Stockholm has a comprehensive public transportation network, including an extensive metro system and commuter rail lines.

Access to healthcare in Stockholm is very good, with a Healthcare Index of 67. A strong healthcare system and infrastructure will always make a place more attractive, which is positive for real estate.

Finally, it is worth noting that Stockholm has three top-tier universities: the Karolinska Institute (top 50), the KTH Royal Institute of Technology (top 150) and the Stockholm University (top 180).

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Renting out in Stockholm

This part is for you if you want to buy a property with the goal of renting it out and making money from it, rather than living there.

Long-term

Tenant Profiles in Stockholm

According to the data reported by Wikipedia, the home ownership rate in Sweden is 65%, which is average.

It means that, if you decide to buy and rent out in Stockholm, there will be a good number of people who can become your potential tenants.

If you decide to buy and rent out to long-term tenants, you should target young professionals, students, families, and expatriates who are living and working in Stockholm. These tenants will be looking for high-quality rental accommodation in the city centre, as well as suburban locations.

Here is a little summary table we've made for you.

Rental yields

As of today, rental yields in Stockholm are floating around 2 or 3%. It's low. A good rental yield is typically considered to be around 7% or higher.

Rental yields in Stockholm are typically highest for properties in the outer suburbs, due to the lower cost of purchase compared to the city centre and the high demand for rental properties from commuters. There is also a high demand for rental properties close to transportation hubs, such as metro and train stations, due to the convenience of easy access to the city centre.

For further explanation and a more detailed breakdown, you can check the reports and analyses we have made.

Finally, be aware that rental incomes in Stockholm are taxed at 20%, which is rather good.

Short-term

You could also decide to rent short-term to tourists, business travelers, or those attending conferences and events in Stockholm. Additionally, short-term rental is popular for people relocating to Stockholm for a short period of time.

If you decide to go with that option, look for properties in Norrmalm, Vasastan, and Östermalm, as they are popular areas with tourists and offer plenty of amenities. Additionally, the Södermalm district is a trendy area that is also great for short-term rentals.

Currently, there are approximately 2,040 active Airbnb listings in Stockholm, reflecting a highly dynamic and bustling short-term rental market. The average daily rate stands around $150, which is quite high.

You have the opportunity to generate a nice additional income stream then. Based on feedback from online testimonials and data analytics platforms such as AirDNA, Guesty, and Inside Airbnb, people who offer short-term rentals in Stockholm can make around $2200 per month. Also, the average occupancy rate is estimated at 84%.

Is it worth buying real estate in Stockholm then?

Certainly, buying a property in Stockholm is a fantastic idea if you plan to make this beautiful Scandinavian city your long-term home. It allows you to build equity, enjoy more control over your living space, and benefit from the city's stable economy, which is expected to grow in the coming years. Stockholm offers an excellent quality of life with top-notch amenities, making it a worthwhile investment for those who value these aspects. If you have the financial means to purchase property, believe in its long-term appreciation, and are willing to commit, buying in Stockholm can be a smart move.

However, if you're looking for a short-term stay or have limited financial resources, renting is the way to go. The property price-to-rent ratio indicates that renting is more cost-effective in the short term, as buying can be relatively expensive upfront. Additionally, if you're risk-averse and concerned about market overvaluation, it might be safer to rent and wait for more favorable conditions. Renting also provides the flexibility to easily explore different neighborhoods or relocate, without the complexities of the property buying process.

In essence, while buying property in Stockholm is a solid investment for those with the right circumstances, renting is often the more practical choice for those seeking flexibility or with short-term plans.

Make sure you understand the real estate market in Stockholm

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The content provided here is for informational purposes only and does not imply endorsement or advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information, including text, images, links, or other elements in this material. Following the content and analyses presented here does not assure specific outcomes. For guidance tailored to your individual circumstances, it is recommended to consult with a professional, such as a lawyer, accountant, or business advisor.