During the pandemic, house prices rose sharply. Realtors and market analysts concluded that home buyers were seeking larger homes because they expected to work more from home.
But that development was interrupted last spring when the Riksbank began to raise its key interest rate, which pushed housing interest rates upwards. Added to that was the rampant electricity price.
DN has previously reported on the development of electricity prices for house prices. Where the price of villas fell more in the south of Sweden than in the north.
Now DN has asked Swedish Real Estate Statistics to produce data on the price development of villas in the 30 largest municipalities in Sweden in terms of population. And it confirms that it is clear that, in addition to interest rates, the price of electricity is hitting house prices hard.
As a rule of thumb – with exceptions – you can say that the more expensive the electricity price range, the greater the price drop.
– There is a huge range between Luleå, where the price has fallen by only 3 percent, and the municipalities in Mälardalen, says Hans Flink.
So house prices have been pressured by the price of electricity
Skyrocketing electricity bills, together with rising mortgage rates, have depressed house prices around the country. The bars show the K/T ratio, which is the purchase price in relation to the assessed value and is used to measure changes in value over time.
Source: Swedish Broker Statistics
Luleå is located in electricity area 1 where the average price has been the lowest in the country in recent years.
Mälardalen is located in electricity area 3 with the country’s next highest electricity prices. Several municipalities there have noted price falls on villas of 15–20 percent. In Eskilstuna, they have fallen by as much as 23 percent.
Since the villas in the Stockholm region and the Mälardalen are among the country’s most expensive, the price drop is also large when measured in kroner. In Täby, north of Stockholm, an average villa has fallen in value by close to two million kroner since the peak last spring.
So you could say that the combination of rising interest rates and high electricity prices hits expensive areas harder than others?
– Yes, there will be onions on the salmon when you also get higher electricity prices, says Flink.
Now a stabilization of the electricity price seems to be on the way. What does this mean for house prices?
– If the electricity prices stabilize, the interest rate will be more decisive for the price development going forward, Flink replies.
The Riksbank is expected to raise the policy rate again in February, which is said to put extra pressure on prices. But Hans Flink still believes that the price falls are slowing down. And sooner or later they will wait upwards again.
– It is inconceivable that they would not do it. Look at the 90s crisis! Then the prices fell significantly more and yet they went up again, he says.
He believes in and with the fact that right now it can be a good deal to buy an electrically heated villa where the price has been pushed extra hard. But this is on condition that the buyer is prepared to invest in other heating, for example geothermal heating.
– If you still want larger accommodation, it’s an extremely good location. The prices won’t go down terribly much more, maybe a little bit, but trying to find the price floor is dead-end, says Flink.
However, Hans Flink emphasizes that buying a home is not a matter of investing money. It must always be about a household’s need for a certain home.
– It is always the need that should rule. It’s really silly to talk about clips and that you “make a good deal”. Then you have missed what housing is for.
– And when it comes to a villa, you have to live there for maybe 20-30 years, he adds.
Read more: Record long selling time for villas.
Read more: Housing prices have fallen by 15 percent.