Scandinavians Splurge on Second Homes Abroad

The Scandinavian dilemma: Buy a small one-room apartment in crowded, wintry Stockholm/ Oslo OR spend half the amount on a roomy house in sunny Florida?

Norrkoping, Sweden, November 26, 2010 --( The Scandinavian dilemma: Buy a small one-room apartment in crowded, wintry Stockholm/ Oslo OR spend half the amount on a roomy house in sunny Florida?

While real estate prices in both southern Europe and the U.S. have bottomed out following the various financial crises, real estate prices in Norway and Sweden have hit an all-time high. With no financial crisis in Scandinavia, both the Norwegian and Swedish “crown” are strong compared to the U.S . dollar and the Euro. High prices on the home front have Norwegians and Swedes looking elsewhere for second homes to invest in.

What is happening with the Swedish economy? The average Swedish disposable income is higher than ever before largely due to an unusually low interest rate coupled with three major income tax cuts. Sweden‘s stable economy survived the brunt of the financial crisis. With voter confidence high, the center/right wing parties were re-elected in the September Parliament election by a wide margin.

Real estate prices have continued to rise this year as in previous years. On average, real estate prices in Sweden have increased by approximately 250% since 1996. Now the price curve seems to be flattening out as a result of rumors that The Central Bank is raising interest rates, and there are even discussions on limiting the percentage that Swedes can borrow from the bank.

Why does Norway have greater spending power now? Neighbouring Norway is in a similar situation where prices have continued to climb over the past few years. In addition, Norway’s oil and gas resources in the North Sea have added substantially to the country’s wealth. Some of that money seems to have trickled down to the pockets of its 4 million inhabitants.

Last year, both the Swedish and the Norwegian crown became much stronger compared with the Euro and the dollar, so suddenly Scandinavians can afford to buy a house in Florida for half the cost of a small one room apartment in central Stockholm or Oslo.

So… A strong currency, the price drop in real estate in southern Europe and in the US, and confidence in Sweden and Norway’s economic development have induced Scandinavians to buy real estate in warmer countries. Especially strong interest is noted among the older population. For the first time ever, Scandinavia has a generation of retirees who speak English, who have travelled extensively, who feel young at heart, and who invest in new experiences rather than purely material things. Leaving their children a huge inheritance is not highest on the retirees* list of priorities. The Scandinavian media has followed this trend with great interest.

The real estate portal, launched two months ago, has reported a large number of Swedes flocking to the site. Last month, reached a global Alexa ranking of 79,000 out of which half the visitors came from Sweden and Norway, thus giving the site a rank in the top thousand in Sweden. “Of course this is good news but hardly surprising. At this time of the year, it’s dark when you go to work, and it’s dark again when you go home. Buying a house in the sun is something everybody wants especially now; even if you can’t afford it right now, looking at the 50,000 properties makes you dream and gives you a sense of freedom,” says Reidar Svedahl, CEO of the company.

*Statistical sources:

House in the sun Scandinavia AB
Bjorn Ingbrandt