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Sweden's property market experienced its worst downturn since 1993, with prices dropping up to 16% from mid-2022 through Q2 2024.
The market has since stabilized and begun recovering modestly in 2025, with national prices rising 2-3% year-on-year. However, significant challenges remain including elevated inventory levels, reduced construction activity, and household debt concerns that continue to shape the market dynamics.
If you want to go deeper, you can check our pack of documents related to the real estate market in Sweden, based on reliable facts and data, not opinions or rumors.
Sweden's housing market bubble has largely burst, with prices falling 10-16% between 2022-2024, but recovery has begun with modest 2-3% annual growth in 2025.
The correction was most severe in Stockholm and Gothenburg, while smaller towns and rural areas are now showing the strongest rebounds with up to 12% annual price increases.
| Market Indicator | 2022-2024 Period | 2025 Status |
|---|---|---|
| National Price Change | -16% peak decline | +2-3% year-on-year |
| Stockholm Prices | Steep decline | +0.2-2.3% annually |
| Malmö Prices | Deep losses | +5%+ annual rebound |
| Rural Areas | Moderate decline | +12% in some regions |
| Mortgage Rates | Rose from 2% to 4% | Dropped to 3.1-3.5% |
| Unsold Inventory | Accumulated | 69,000 homes (+17% YoY) |
| Construction Activity | Declining | -30% completions in 2024 |
How much have apartment and house prices in Sweden actually dropped over the past 12 to 24 months?
Swedish property prices fell by up to 16% from mid-2022 through Q2 2024, marking the country's worst housing market downturn since 1993.
The decline lasted seven consecutive quarters, ending Sweden's prolonged property boom that had driven prices to record highs. As of September 2025, national prices have recovered and are rising 2-3% year-on-year, with the average house price reaching SEK 3.7-4 million.
This correction represents one of the most significant property market adjustments in modern Swedish history. The downturn was triggered by rapidly rising interest rates, tightened lending conditions, and reduced buyer confidence as the economic environment shifted dramatically from the low-rate pandemic period.
The recovery that began in late 2024 has been modest but consistent. Monthly price data shows stabilization across most regions, though the pace of recovery varies significantly between urban centers and rural areas.
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Are there big differences in price changes between Stockholm, Gothenburg, Malmö and smaller towns?
Yes, regional differences in price movements have been substantial across Sweden's property markets.
Stockholm experienced the most conservative recovery, with prices rising only 0.2-2.3% year-on-year in 2024-2025, indicating much slower growth than pre-2022 levels and reflecting the steeper preceding fall. The capital's premium market segments remain particularly cautious.
Gothenburg saw modest price gains of 1-4% annually during the recovery period, performing better than Stockholm but still lagging behind smaller markets. Malmö registered the sharpest rebound among major cities, with 5%+ annual increases following deep earlier losses.
Smaller towns and rural areas are experiencing the strongest relative price growth in 2025, with some regions showing up to 12% year-on-year increases. These areas benefited from less severe corrections during the downturn and continued demand from buyers seeking affordability.
University towns and rural regions often maintained better market dynamics throughout the correction period, making them more resilient during both the decline and recovery phases.
What do the latest figures show about the number of unsold properties sitting on the market right now?
As of mid-2025, approximately 69,000 unsold homes are on the Swedish market, representing a 17% year-on-year increase.
This elevated inventory level reflects continued high supply and suggests that market absorption remains challenging despite the price recovery. The surplus inventory accumulated during the downturn period when transaction volumes dropped significantly.
The high inventory levels indicate that while prices have stabilized, the market hasn't fully cleared the excess supply created during the correction period. Sellers are still competing in a buyer's market in many segments.
Regional variations in inventory levels mirror the price recovery patterns, with Stockholm and Gothenburg showing higher relative inventory levels compared to smaller towns and rural areas where demand has been stronger.
How quickly are homes selling compared to last year, and has the average time-on-market increased significantly?
Homes now take an average of 28 days to sell in Sweden, slightly above the 25-day average seen in 2021 but faster than during the 2023 downturn peak.
This represents a modest improvement in market liquidity compared to the worst periods of the correction when properties stayed on the market for extended periods. However, selling times remain above pre-correction levels.
Transaction volumes increased by 16% in 2024, showing renewed market activity, but volumes are moderating again in 2025. This suggests that while buyer interest has returned, the pace of absorption is improving slowly.
The improvement in selling times indicates that the market is finding better price equilibrium, though sellers still need to be more patient compared to the rapid sales environment of 2020-2021.
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How much have average mortgage interest rates risen since 2021, and what does that mean for monthly payments?
Swedish mortgage rates surged from below 2% in 2021 to a peak of approximately 4% in 2023, when the central bank policy rate climbed to 3.75%.
Since early 2024, rates have retreated significantly, with average new mortgage rates dropping to 3.1-3.5% by June 2025. While this has reduced pressure on buyers, rates remain well above pre-pandemic levels.
Monthly payments for a typical variable-rate mortgage are still 25-60% higher than in 2021, making homeownership significantly less affordable despite lower property prices. This payment increase has been a major factor constraining buyer demand.
The impact is particularly severe for Swedish households because most mortgages are variable or short-term fixed rate, exposing borrowers directly to interest rate fluctuations. This structure amplified the affordability shock when rates rose rapidly.
For a typical SEK 3 million mortgage, monthly payments increased from approximately SEK 8,000 in 2021 to SEK 10,000-12,800 currently, representing a substantial increase in housing costs for Swedish families.
Are Swedish households more indebted than households in other European countries, and is that debt becoming harder to service?
Swedish households are among the most indebted in Europe, with high loan-to-income and debt-to-GDP ratios that create vulnerability to interest rate changes.
The predominantly variable-rate mortgage structure exposes Swedish households directly to interest rate spikes, resulting in heightened financial stress during 2022-2024. This makes Sweden's household sector particularly sensitive compared to countries with more fixed-rate lending.
Rising interest costs made debt significantly harder to service, especially from 2022-2024 when rates increased rapidly. Many households faced substantial increases in their monthly debt service obligations.
Loan serviceability is showing some improvement with lower rates in 2025, but this remains a significant concern for overstretched households. The high debt levels continue to constrain spending power and property market participation.
Government and banking regulators have implemented stricter lending standards and debt-to-income caps to address these vulnerabilities, but the existing debt stock remains exposed to rate volatility.
What has been happening to rents, and are people shifting from buying to renting because of affordability issues?
Rental prices are rising across Sweden, though not as rapidly as purchase costs, with premium and centrally located rentals experiencing the strongest increases.
Many potential buyers have shifted to renting due to higher interest rates and tighter mortgage requirements, contributing to upward pressure on rental markets. This tenure shift has become a notable trend since 2022.
Legal rent controls cap growth in older apartment stock, but newer rental units and premium segments face fewer restrictions, leading to divergent rental price movements across different property types.
The rental market is absorbing demand that would traditionally flow to the purchase market, creating additional pressure on an already constrained rental supply in major cities like Stockholm and Gothenburg.
This shift from ownership to rental demand represents a structural change in housing consumption patterns, driven by affordability constraints rather than preference changes.
How many new housing units are under construction, and are developers slowing down or cancelling projects?
New housing completions dropped by 30% year-on-year in 2024, and total units under construction have fallen sharply as developers slow or cancel projects.
Developers remain highly cautious due to weak profitability prospects and elevated borrowing costs, leading to concerns about future housing shortages if demand recovers more strongly than supply can respond.
The construction slowdown reflects multiple pressures including higher material costs, increased financing costs, and uncertain demand conditions that make new projects less viable financially.
Many planned developments have been postponed or cancelled entirely, creating a pipeline shortage that could constrain supply when market conditions improve. This dynamic could support future price increases if demand recovery outpaces supply additions.
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We did some research and made this infographic to help you quickly compare rental yields of the major cities in Sweden versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
What are Sweden's unemployment and wage growth trends, and how do they impact people's ability to buy property?
Swedish unemployment remains relatively stable, but wage growth is moderate and is being eroded by inflation, tempering purchasing power.
The combination of modest wage increases and higher living costs limits buyers' capacity to absorb higher mortgage costs, constraining effective demand in the property market.
Employment stability has helped prevent a more severe property market correction by maintaining household confidence and limiting forced sales, but income growth hasn't kept pace with housing cost increases.
The labor market's resilience has been crucial in preventing widespread mortgage defaults, but it hasn't provided the income growth needed to restore previous levels of housing affordability.
These employment and wage trends suggest that property market recovery will likely remain gradual, as buyers' financial capacity to participate in the market remains constrained relative to pre-2022 levels.
Are international buyers or investors pulling out of the Swedish housing market, or still active?
Foreign and investor activity has reduced sharply since mid-2022, with many international buyers pausing purchases due to market uncertainty and the weak Swedish krona.
However, some international investors are returning as prices have stabilized and the weak krona makes Swedish properties more attractive for foreign currency holders. This represents a gradual re-engagement rather than a flood of international capital.
The weak krona provides a currency advantage for international buyers, potentially offsetting some of the market uncertainty that drove them away during the correction period.
Investment activity remains below historical levels as both domestic and international investors remain cautious about market timing and future price movements, though bargain-hunting activity has increased in select segments.
What are major Swedish banks reporting about mortgage defaults or late payments?
Major Swedish banks indicate low but slightly rising mortgage default rates, with most defaults contained due to strong employment and government support policies.
Banks continue ongoing monitoring for risk pockets, particularly among highly leveraged households and those with variable-rate mortgages who experienced the largest payment increases.
The banking sector's strong capital position and conservative lending practices have helped contain credit losses, but institutions remain vigilant about potential stress in vulnerable household segments.
While default rates remain manageable, banks have tightened lending standards and are requiring larger down payments and stronger income verification for new mortgages.
The financial system's stability has been maintained, but banks are preparing for potential increases in problem loans if economic conditions deteriorate or rates rise again.
What do government or central bank forecasts say about the property market over the next 12 months?
Government and central bank projections generally expect continued stabilization or modest recovery in Swedish property prices through 2025, assuming rates remain stable and the economy improves.
Official forecasts anticipate no major price rebound but expect gradual improvement, with possible annual price growth of 2-5% in 2025. This represents a measured recovery rather than a return to previous boom conditions.
Downside risks to these forecasts include renewed inflation pressures that could force interest rates higher again, or weaker global economic conditions that could impact Swedish employment and household confidence.
The consensus view among officials is that the market has largely completed its correction and established a new equilibrium, though vulnerabilities remain due to high household debt levels and ongoing affordability challenges.
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Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Sweden's property market has largely worked through its correction phase, with the worst of the bubble burst behind us. The 16% peak decline from 2022-2024 represents a substantial adjustment that has reset prices to more sustainable levels relative to incomes and economic fundamentals.
While modest recovery is underway, significant structural challenges remain that will shape the market going forward. High household debt levels, elevated inventory, reduced construction activity, and affordability constraints suggest that any price recovery will be gradual rather than a return to previous boom conditions.
Sources
- Global Property Guide - Sweden Price History
- International Banker - Sweden's Housing Market Pain
- Investropa - Average House Price in Sweden
- Investropa - Sweden Real Estate Market Analysis
- Investropa - Sweden Housing Market Overview
- Investropa - Sweden Price Forecasts
- Nordic Credit Rating - Swedish Real Estate Outlook 2025
- Trading Economics - Sweden Housing Index