Authored by the expert who managed and guided the team behind the Sweden Property Pack
Everything you need to know before buying real estate is included in our Sweden Property Pack
Are you considering investing in Sweden’s real estate market? What are the legal steps, tax implications, and cultural differences you need to understand before taking the plunge? What challenges do foreign investors typically face, and how can you overcome them?
These are the questions we hear most often from foreign investors because we’re actively connected to this market. We’ve spent time working with local agents, developers, and investors, so we know what works—and what doesn’t. That’s why we’ve written this article: to provide a clear guide that answers the questions we get asked daily.
Our goal is to help you, as a foreigner, to navigate the property buying process with confidence. If you think there’s something we missed or want more details, let us know (please do!). Your input helps us refine and improve our advice for everyone.
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1) Consider properties in Malmö or Gothenburg for investment, as these areas are rapidly growing and developing
Investing in properties in up-and-coming areas like Malmö or Gothenburg is a smart move for maximizing profit.
Both cities are seeing a significant population boom. Malmö's population grew by 4,756 residents between 2021 and 2023, and it's expected to add about 34,000 more by 2034. Gothenburg's metro area is also on the rise, with projections showing a steady increase to 693,120 by 2035. This surge in residents means a higher demand for housing, which can drive up property values.
These cities are not just growing in numbers; they're also investing heavily in infrastructure and urban development. Gothenburg is set to receive investments between EUR 80-100 billion by 2035, focusing on housing, infrastructure, and logistics. Such developments enhance the quality of life and make these areas more appealing to newcomers and businesses, further boosting property demand.
The real estate market trends in Malmö and Gothenburg show increasing property values. In Malmö, the office vacancy rate rose to 12% in Q3 2024, indicating a strong market for property investments. Gothenburg is experiencing a similar trend, with an office vacancy rate of 11% during the same period, suggesting a rising demand for properties and a modest increase in rental levels since mid-2022.
Both cities are attracting new businesses and talent, contributing to job creation and economic growth. Malmö's young population and favorable business environment make it a magnet for businesses. Meanwhile, Gothenburg is seeing significant business growth and investments in new districts and improved transport infrastructure.
Sources: Population Statistics for Malmö, Economic Development in Gothenburg, Real Estate Market Trends
2) Understand that owning a “bostadsrätt” in Sweden means you own shares in a housing association, not the property
In Sweden, owning a "bostadsrätt" means you own shares in a housing association, not the property itself.
This unique setup can limit your control over your living space. For instance, if you want to renovate, you often need approval from the housing association. This can lead to delays and extra costs, which many find frustrating. Renovation requests are frequently denied, often because associations want to maintain the property's overall value and aesthetic appeal.
Subletting your bostadsrätt is another area where your control is limited. You need permission from the housing association, and the process can be lengthy and bureaucratic. Applications and documentation can take weeks or even months to get approved, highlighting the limited control you have over your property.
These restrictions are part of the trade-off for living in a bostadsrätt. While you might enjoy a sense of community and shared responsibility, the lack of autonomy can be a downside for some. It's important to weigh these factors when considering a purchase.
Understanding these dynamics can help you make an informed decision. If you're someone who values independence in property management, a bostadsrätt might not be the best fit. However, if you appreciate the benefits of shared ownership, it could be a great option.
We made this infographic to show you how property prices in Sweden compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
3) Be aware that Sweden’s strict rent control laws make buy-to-let investments potentially less profitable compared to other countries
In Sweden, about 30% of people live in rented homes, highlighting a strong rental market.
Despite this, rental yields in Sweden are modest. For instance, in 2024, Stockholm's average rental yield was 4.53%, which is lower than many other European cities. This means that if you're considering rental investments, the returns might not be as high as in places with fewer regulations.
The reason behind these moderate yields is Sweden's strict rent control laws. These laws cap rent increases, making it tough for landlords to hike rents significantly. This can make buy-to-let investments less profitable compared to other countries.
Looking at the past, rental prices in Sweden have been quite stable. From 2016 to 2023, real changes in rent were negative when adjusted for inflation. While this stability is great for tenants, it might not be as appealing for investors seeking high returns.
So, if you're thinking about investing in Swedish property, it's crucial to understand these dynamics. The rental market is strong, but the potential for high returns is limited by these regulations.
In summary, while Sweden offers a stable rental environment, the profitability of rental investments might not match that of less regulated markets. This is something to keep in mind if you're considering buying property here.
Sources: Global Property Guide, CBRE, HVPOA, Statista
4) Consider properties with home office spaces in Sweden, as remote work is becoming increasingly popular
In 2023, nearly 44% of employees in Sweden worked from home, showing that remote work is here to stay.
Sweden's top-notch digital infrastructure and focus on flexible work setups make it easy for professionals to work from anywhere. This setup has led to more people choosing to work from home, even after the pandemic.
The real estate market is catching on, with a noticeable rise in demand for homes with dedicated office spaces. In 2024, domestic investors showed strong interest in residential properties with office spaces, reflecting this shift.
As remote work becomes more popular, property listings are now emphasizing home office features. This change is driven by the need for spaces that cater to both work and personal life.
For those looking to invest, properties with home office spaces are becoming increasingly attractive due to the growing trend of remote work in Sweden.
With more Swedes working from home, the demand for versatile living spaces is on the rise, making it a smart move to consider properties that offer these features.
Sources: Statista, Jobgether, Savills Sweden Office Report
5) Consider eco-friendly properties in Sweden, as sustainable living and green building practices are highly valued
Thinking about buying a property in Sweden? Eco-friendly homes are a smart investment.
Sweden is a global leader in sustainability, consistently ranking high in environmental performance. The country has a strong track record in renewable energy and is committed to reducing greenhouse gas emissions. This makes it an ideal place for those interested in sustainable living.
The Swedish government is serious about going green. Since 2021, they've implemented policies like biofuel blending to push towards carbon neutrality by 2045. This kind of support makes investing in eco-friendly properties not just viable but also appealing.
People in Sweden are increasingly interested in sustainable living. In 2023, a survey found that 55% of Swedish consumers are willing to pay more for sustainable options. This growing demand is a good sign for anyone considering investing in eco-friendly homes.
Green building certifications like BREEAM and LEED are becoming more common in Sweden. These certifications are widely recognized and add value to properties, making them more attractive to buyers who care about sustainability.
Sources: CCPI, Economy Finance, Fellow Future, Fagerhult
Don't buy the wrong property, in the wrong area of Sweden
Buying real estate is a significant investment. Don't rely solely on your intuition. Gather the right information to make the best decision.
6) Know that in Sweden, real estate agents handle most property transactions, so find a trusted agent instead of a lawyer
In Sweden, property transactions often happen without a lawyer, which might surprise some.
Instead, real estate agents take the lead in these deals, handling everything from paperwork to negotiations. Thanks to the Swedish Estate Agents’ Act, these agents are tasked with creating key documents like the bill of sale, which is then registered with the Land Registrations Authorities for public acknowledgment. This system is designed to be efficient and straightforward.
Swedes generally have a high level of trust in their real estate agents. The Estate Agents Act ensures that agents act honestly and impartially, serving as fair intermediaries between buyers and sellers. To maintain this trust, agents must complete a university education and register with the Swedish Estate Agent Inspectorate, ensuring they are well-qualified.
Foreign buyers often find the Swedish property market refreshingly transparent and efficient. The legal framework, outlined in the Swedish Land Code, supports a process that is straightforward and doesn't require lawyers. This is quite different from many other countries where notaries or solicitors are involved, making Sweden's approach unique.
For those considering buying property in Sweden, it's crucial to have a trusted real estate agent. They handle most of the process, ensuring everything runs smoothly. This might seem odd to those used to involving lawyers in property transactions, but in Sweden, the system is designed to work without them.
Sources: TEN Law, Maklarsamfundet, Lawyers Sweden
7) Check the financial health of the “förening” when buying a cooperative apartment to avoid unexpected costs from poor management
When buying a cooperative apartment, it's vital to check the financial health of the "förening" or housing association.
In Sweden, the financial supervisory authority highlights that tenant-owner associations carry significant debt, averaging SEK 6,300 per square meter. Newer associations in fresh buildings often have even higher debt levels. This debt isn't part of the formal amortization requirement, so if the association is mismanaged, you might face increased monthly fees or special assessments to cover maintenance and repairs.
Real estate agents and financial experts always emphasize reviewing the association's finances before buying. The reason is simple: the financial health of the association can directly impact property values and your monthly expenses. If the association is financially unstable, it could lead to legal disputes or even bankruptcies, further increasing your costs.
Imagine moving into a place only to find out that the association is in financial trouble. This could mean unexpected costs and headaches for you as a property owner. It's not just about the apartment itself; the association's financial health is equally crucial.
In some cases, poorly managed associations have led to unexpected legal disputes or even bankruptcies. This is why understanding the financial standing of the förening is not just a recommendation but a necessity.
So, before you sign on the dotted line, make sure to dig into the association's financial reports. It's your best bet to avoid surprises and ensure a smooth ownership experience.
Sources: Economy Finance, Luleå University of Technology, Skanska Annual Report
8) Prioritize homes with good natural light and insulation in Sweden, as long, dark winters affect property desirability
In Sweden, the long, dark winters greatly influence home buying decisions.
Buyers are keen on properties with ample natural light, making homes with large windows or south-facing orientations highly desirable. This is because more sunlight makes living spaces brighter and more inviting, a crucial factor during the gloomy winter months.
Another important aspect is energy-efficient insulation. Even when house prices in Greater Stockholm dipped in 2023, homes with superior insulation often fetched higher prices. This is because they are more energy-efficient, keeping heating costs down during the cold months.
Real estate listings in Sweden frequently emphasize natural light as a key feature. Surveys reveal that buyers prioritize well-lit homes, driven by the harsh winter conditions that can lead to seasonal affective disorder (SAD). Studies highlight the psychological impact of these long, dark winters, underscoring the need for homes that offer adequate lighting to support mental health.
Insider tip: homes with good natural light and insulation are more sought after due to the impact of Sweden's winters. This means they often sell faster and at better prices.
So, if you're considering buying property in Sweden, remember that natural light and insulation are not just features, but necessities for a comfortable living experience during those long winters.
Sources: Global Property Guide, Statista, UNFCCC
We believe this video demonstrates Swedish building techniques for harsh winters, focusing on natural light and insulation to improve comfort and energy performance in homes. https://www.youtube.com/watch?v=LUthssuOYks
9) Consider Sweden for stable long-term property investments, as its market is less volatile than others
Sweden's property market is known for its consistent growth and stability, making it a smart choice for long-term investment.
In major areas like Greater Stockholm, Malmo, and Gothenburg, property prices have seen significant increases over the years, even when adjusted for inflation. This trend highlights the market's resilience and potential for future growth.
One key factor behind this stability is the low risk of mortgage defaults in Sweden. Mortgages are backed by collateral and personally guaranteed by borrowers, which, combined with an efficient debt collection system, keeps default rates low. This setup allows banks to offer loans at attractive interest rates, supporting stable housing prices.
The Swedish government plays a crucial role in maintaining housing stability through policies like the Real Property Formation Act. This act ensures transparency and stability in property transactions, creating a secure environment for investors. Additionally, Sweden's strong legal framework protects property rights, adding another layer of security.
For those considering buying property in Sweden, it's worth noting that the market's stability is further supported by a robust legal system that safeguards investments. This makes Sweden an appealing option for those looking to invest in a reliable market.
Sources: Global Property Guide, BSIC, Boverket
10) Prepare for competitive bidding in Sweden’s “budgivning” process, as final prices can exceed the asking price significantly
In Sweden, buying a property means navigating a unique process called "budgivning," where final prices often soar above the initial asking price.
This competitive market sees many buyers vying for the same homes, especially in hotspots like Stockholm and Gothenburg. Properties frequently sell above their asking prices, a trend highlighted by real estate agencies such as Fastighetsbyrån. This means buyers need to be ready to pay more to secure their dream home.
Imagine you're eyeing a charming apartment in Stockholm. You might find yourself in a bidding war, where acting quickly and strategically is crucial. These bidding wars can significantly drive up prices, making it essential to have a game plan.
Expert analyses and historical data back up the impact of "budgivning" on property prices. Being prepared for competitive bidding is key if you want to succeed in this market. It's not just about having the funds; it's about knowing when and how to make your move.
Real estate agencies often report on this trend, emphasizing the need for buyers to be savvy and informed. Understanding the dynamics of "budgivning" can give you an edge in securing a property.
So, if you're considering buying in Sweden, remember that the market is not just about the price tag you see. It's about the strategy you bring to the table in this fast-paced, competitive environment.
Sources: Fastighetsbyrån, TEN
11) Prioritize properties near parks or transit hubs in Sweden, as locals value proximity to nature and public transport
In Sweden, property values near parks and nature reserves have been climbing steadily.
Imagine buying a cottage in the Swedish countryside for $500,000 five years ago; today, it would be worth about $574,000, reflecting a 14.7% increase in value. This surge shows how much people value living close to nature.
Homes near public transport hubs are also in high demand. Properties within a half mile of public transit often outperform those farther away in value, making accessibility a crucial factor in real estate choices.
Swedes have a strong preference for living near green spaces, as shown by surveys and market analyses. This preference is evident in the rising property values and urban development plans that emphasize nature and transport access.
Locals often prioritize proximity to nature and public transport, so properties near parks or transit hubs can be more valuable. This trend is shaping how cities are being developed.
For anyone considering buying property in Sweden, it's worth noting that homes near nature and transit are highly sought after, offering both lifestyle benefits and potential financial gains.
Sources: Global Property Guide, Government of Sweden, APTA
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12) Focus on properties with open layouts and smart storage in Sweden, as minimalism and functionality are highly valued
Swedes love minimalism and functionality in their home design.
In recent years, Scandinavian design has gained global popularity, with its roots deeply embedded in Swedish culture. This style is all about clean lines and natural materials, and Swedes particularly appreciate furniture that serves multiple purposes.
The Swedish home décor market is on the rise, with a projected growth of 2.80% from 2024 to 2029. This growth is fueled by a strong preference for designs that are both minimalistic and functional. Swedes are increasingly drawn to products that are not just beautiful but also practical, reflecting a cultural shift towards sustainability and eco-friendliness.
When browsing real estate listings in Sweden, you'll often see a focus on open layouts and smart storage solutions. For example, a luxury townhouse in Västra Hamnen was snapped up because of its spacious rooftop terrace and ample storage, appealing to those who value functional and minimalist living.
Architectural trends and media coverage frequently highlight Swedish design principles, emphasizing minimalism and functionality. This is evident in the way properties are marketed, showcasing features that align with these values.
Sources: Dhwani Patel Designs, Statista, Le Figaro Properties
13) Prioritize energy-efficient homes in Sweden, as high energy ratings make properties more appealing to buyers and renters
In Sweden, energy-efficient homes are a hot commodity.
In early 2024, 46% of property transactions involved homes with low energy consumption, highlighting a strong market preference for energy efficiency. This means that if you're looking to buy or rent, homes with high energy ratings are likely to be more appealing.
The Swedish government is sweetening the deal by offering grants up to SEK 60,000 for homeowners to boost their home's energy efficiency. These incentives not only make upgrades more affordable but also enhance the property's value and attractiveness.
Interestingly, many people in Northern Sweden are on board with this trend. Surveys reveal that a significant number are willing to change their habits to cut down on energy use, even if it means spending more or sacrificing comfort.
Homes with high energy ratings aren't just popular; they're also more valuable. In the first half of 2024, 25% of the total housing stock, measured in square meters, was certified, making up about 37% of the transaction volume. This shows that energy-efficient homes are a smart investment.
Sources: ULMA, Interreg Baltic, Savills Sweden Research
From this video, we realize that energy efficiency is deeply embedded in Swedish architecture. It shows a home wrapped in a greenhouse, maintaining higher indoor temperatures during winter, demonstrating Sweden's innovation in energy-efficient living. https://www.youtube.com/watch?v=30ghnDOFbNQ
14) Ensure you get a thorough inspection report in Sweden, as the property market is highly regulated with strict disclosure rules
Buying property in Sweden means navigating a highly regulated market.
These regulations ensure that everything is transparent, with strict rules on property disclosures. When you decide to purchase, expect a detailed written agreement that spells out the property details, the buyer and seller, and the sale price. This thorough documentation is essential to prevent misunderstandings and disputes.
One crucial step is getting a comprehensive inspection report. In Sweden, it's common to hire an SBR-approved inspector who will check all visible areas of the property. This inspection is vital because it provides a clear picture of the property's condition and highlights any potential risks.
Having this report in hand gives you peace of mind, helping you avoid unexpected issues after the purchase. It's a small investment that can save you from big headaches down the road.
Remember, the Swedish property market's transparency is designed to protect you. So, make sure you receive a thorough inspection report before finalizing any deal. This is not just a recommendation; it's a smart move in a regulated market.
With these insights, you're better equipped to make informed decisions and enjoy the benefits of owning property in Sweden. Embrace the process and take advantage of the protections in place.
Sources: DLA Piper Real World, CAC Sweden, S&P Global
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility. Finally, please note that we are not affiliated to any of the sources provided. Our analysis remains then 100% impartial.