Demographics, Statistics, and History

Demographics, Statistics, and History

Sweden is the largest county in Scandinavia, located in Northern Europe. It is bordered by the Baltic Sea, Gulf of Bothnia, Kattegat, and Skagerrak, between Finland and Norway (1). The Sweden that we know of today materialized out of the Kalmar Union which had been formed by the unification of the country by King Gustav Vasa in 1397. Since then Sweden has gained territories and also had to give up territories from the 17th century to today with the last war in 1814 when they entered into a personal union with Norway. Since the last war Sweden has been at peace adopting a foreign policy of neutrality during wartime and a non-aligned during peacetime (2).

After the economy was stagnant in 1970’s it faced large imbalances in the 1980’s and this all followed by a financial crisis and a subsequent recession ending in the mid 90’s which caused for a number of institutional changes. Sweden joined the EU in 1995 but has still not accepted the Euro as its currency. Entering the EU helped bring full integration in the European market place of the trade-oriented Swedish economy. Sweden is the third largest country in Europe and the 55th largest in the world when it comes to size, but when we take a look at its total population it is considered to be rather small. The current head of the state of the Kingdom of Sweden is King Carl XVI Gustaf, who follows a constitutional monarchy political system with a central government that is center-right majority, which has been ruling since the election in 2006, with the next scheduled elections to be in 2010. The official language is Swedish, which is a North Germanic language. The current population is said to be roughly 9.1 million covering an area of 450,000 square kilometers which totals about 22 people per square kilometer. The current currency is the Swedish krona which equals 100 ore, and has an exchange rate of SEK 1 = € 0.11 = $ 0.14, the GDP (purchasing power parity) is $290.1 billion (2006est.), the GDP (official exchange rate) is $372.5 billion (2006 est.) with the GDP per capita at SEK 295,000. A 2006 est. has the real growth rate GDP at 4.5% with an estimated work force of 4.586 million and an unemployment rate is of 5.6% (3).

There are three major cities: Stockholm, Gothenborg, and Malmo which have had the greatest demand for real estate. Approximately twenty percent of the population lives in greater Stockholm which is located on the Baltic Sea which is built on fourteen islands. Gothenburg which is located on the west coast has a major port and industrial center. The city that is said to have the greatest economic potential is Malmo, located on the south coast. A bridge has recently been completed connecting Malmo to Copenhagen, Denmark which has started a trend of workers that work in Copenhagen to buy homes in Malmo since the prices are currently lower and commute via the new bridge (4).

The housing market in Sweden is currently unclear, since the rents that a landlord can charge are currently hindered since the rent rates are based on the cost-oriented rent in public housing which is lower than the actual rents that could be obtained. In order to help fix this problem supply and demand needs to match up. The only way would be to develop more units, but no one wants to develop units if they know beforehand that the rent is going to be somewhat regulated by the public housing. This is setting a new trend of landlords who convert the current apartment into flats which can then be purchased on the open market. In the US in 2005 we had a lot of condo-conversions going on in South Florida which is the change from a rental unit into a condominium which is then sold for a certain price. The only difference is that in the US you can not only convert one rental unit, the whole rental community would have to be purchased and all the units in the community would be converted and then the developer sells each unit, the current rent regulation would have to be removed in order to help interest investors in rental projects. In contrast to the current rental market, the housing prices have not suffered at all. Good explanations for the boom in the housing prices have been the very desirable interest rates and the rising incomes. Since the trough that ended in 1996 Sweden has had an average price growth rate of 8.5% and in 2006 reached a high of 13%. Research has shown that the fast growth of housing prices has been attributed to overvaluation. This is bringing concerns to scholars, because if the interest rates start to rise from the low levels, “fundamentals”