The increasing gap of demand and supply in the housing sector
The Housing Market refers to the supply and demand for houses, as a rule in a specific nation or district. A key component of the housing market is the average house costs and trend in house costs.
Let’s understand the basic principles of Supply and Demand:
Supply and Demand
The law of supply and demand is an essential economic principle that clarifies the relationship between demand and supply for any product or service, and how their interaction influences the cost of that product or service. When there is a high demand for a product or service, its value rises. On the other end, if the demand is low of any product or service and large supply it, the value falls.
The hypothesis of supply and demand is one of the most fundamental principles in economics. Supply and demand work against each other until the point at which the equilibrium cost is achieved—that is the cost where supply is equivalent to demand in the market.
The law of demand directs that individuals will have no or low demand for a product that has a more significant cost. That occurs, obviously, when every other factor remains equivalent. Individuals have to sacrifice something that comes at a higher cost, which controls demand. Correspondingly, lower-cost drives demand, which means buyers value and buy something more when it’s expensive.
With regard to the law of supply, costs drop when there is an expansion in the supply of any product or service in the market. However, when costs increment, the number of products and services will generally drop. In general, it will cost more to produce and sell products at a more significant price.
Supply and demand work against one another until the point at which a property’s equilibrium cost is reached.
A low supply may drive costs up, which is the thing that will happen in general with an offering bid. A particular property might be in demand by numerous parties who attempt to outbid each other by increasing their cost offer. The offering bid war closes—exhausting the supply—when the seller accepts one of the offers. When there is a high demand for properties in a specific city or state, and a lack of supply of quality properties, the costs of houses will generally rise. At the point when a feeble economy and an oversupply of properties prompt low or no demand for housing, the costs of houses will generally fall.
Situation and Circumstance of the housing sector in Sweden
In Sweden, the estate agent profession is managed by the Estate Agents Act; both with regards to one side to seek after office exercises and with regards to the estate agents’ obligations, responsibilities, and rights. Mäklarsamfundet is the biggest and oldest organization of Sweden for Real Estate Agents – developing services on the Housing Market since 1919. An estate agent needs to register with a special government authority and the prerequisites for the registration are detailed in the Estate Agents Act.
Over the previous years, an increasing gap in demand and supply in the housing sector has intensified in numerous nations over the world. So also, the circumstance in the territory of Sweden is all the most exceedingly awful. According to the most recent year details distributed in GLOBAL PROPERTY GUIDE
Sweden’s house prices down 2.09% y-o-y in Q1 2019
The nationwide house price index fell by 2.09% during the year to Q1 2019, in contrast to a y-o-y rise of 2.71% in the previous year. It was the fourth consecutive quarter of annual price falls. Quarter-on-quarter, house prices increased slightly by 0.68% during the latest quarter.
House prices surged by 44% in the past 6 years.
Demand and supply falling. Homes sold in one- to two-dwelling buildings fell by 14.5% y-o-y to 9,915 units in Q1 2019, after falling by 1.2% last year according to Statistics Sweden.
In Q1 2019, dwelling starts in newly constructed one- to two-dwelling buildings fell by 29.4% y-o-y to about 2,081 units, after falling by 18.3% in 2018. Likewise, dwelling completions also dropped 47.1% to 1,789 units over the same period.
Rents, rental yields: yields figures are hard to get.
Stockholm apartment costs are around €6,991 per sq. m.
|Sweden: typical city center apartment buying price, monthly rent (120 sq. m)|
|Buying price||Rate per month||Yield|
Recent News: The Swedish economy grew by about 2.3% last year, from annual growth rates of 2.1% in 2017, 2.7% in 2016, 4.5% in 2015 and 2.6% in 2014.
Recently, the National Institute of Economic Research revised downwards its 2019 growth projections for Sweden to just 1.3%, from an earlier forecast of 1.9%, amidst a decline in housing investment.
To overcome the gap we need to aware and prepare our coming graduates by offering education, seminars, legal advice from the country’s most qualified legal advisor on real estate law, beneficial liability insurance and more. This profession will bring highly professional individuals who will motivate investors to invest in the housing sector to kill the gaps. We believe in the importance of a housing market built on healthy and long-term sustainable foundations, and by our own analyses, we want to contribute to a fact-based debate. And we are establishing a platform to work strongly on it.