As England’s housing market restarts after being put in the deep freeze, it will be sharply scrutinised for the effects of the lockdown. Sweden, which never had such restrictions, may offer some clues.
In Sweden, the market has been open during the entire crisis. While under new rules in England, viewings are now restricted to two adults from one household, in Sweden, some agents are still doing open houses.
But Sweden’s more relaxed attitude does not mean its property market hasn’t suffered. Even though it was not put under lockdown, it is now being hit by the same forces that will soon hit England’s restarted market.
Racing to buy
As in Britain, where the decisive general election result at the end of 2019 brought a boost to the market, Sweden’s market was on the up at the beginning of the year.
Pia-Lotta Svensson, of estate agent Fastighetsbryån, who works in central Stockholm, said: “In January and February we saw the highest prices since March 2017.”
When the coronavirus outbreak began, this only continued. Buyers and sellers rushed to get deals through, worried that the country was about to go on lockdown.
Johan Vesterberg of Fastighetsbryån said listings in mid-March were up about 25pc year-on-year. There was a surge, an echo of which is now happening in England’s market.
The pandemic effect
Then the economic side effects hit: Anders Elbe, of Sotheby’s International Realty, said the housing market has moved “slowly into shock”. As the long-standing economic implications of the pandemic have started to loom on the horizon, things has begun to stall.
Prices and transactions were stable in March and April, said Mr Vesterberg, and in May, they have fallen. The number of sales is about 20pc down on the same period last year.
The sales that are happening take longer. In March, as buyers and sellers rushed to transact fearing the country could enter lockdown, apartments were listed for an average of 16 days on Hemnet, a property portal, before they sold. In April, the period increased to 19 days.
“Everyone is more anxious and worried,” added Mr Vesterberg. “We think we will see a price drop of 5 to 6pc this year.”
This suggests that lockdown itself is not a big factor. When it comes to property markets, what really matters is the economy, employment, buying power and consumer sentiment.
Analysts are not anticipating a crash, with low interest rates and mortgage rates at about 1.5pc. As in Britain, the Swedish government has introduced wage protection schemes and homeowners can take mortgage holidays.