Published 16 June 2021 at 10.24
Economics. The difference between the starting price and the final price of housing – the so-called bid premium – has increased sharply during the pandemic and was at a record high in April.
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Compared to the advertised starting price, the price of villas rose by 13 percent during bidding in April, while condominiums increased by an average of 9 percent.
This is shown by Länsförsäkringar Fastighetsförmedling's new survey based on statistics from Swedish Real Estate Statistics.
– The pandemic has meant more time at home, which means that more people value their housing higher than before. The low interest rates and an expected stable economic development mean that more people now feel secure in going further in bidding, says Marcus Svanberg, CEO of Länsförsäkringar Fastighetsförmedling, in a press release.
After being around 2–7 per cent for the past three years, the difference between the starting price and the final price of housing, the so-called bid premium, has increased significantly in 2021. In April this year, the home buyer had to pay an average of 13 per cent more than the starting price, while the bid premium on condominiums amounted to 9 percent during the same period. April this year is thus the month in the last three years with the largest difference between the starting price and the closing price.
– Many homes are sold even before regular viewing and in some areas housing prices risk being pushed up to levels that are not sustainable in the long term. For us real estate agents, it is important to try to set as accurate starting prices as possible so that buyers and sellers can feel safe through the housing deal, says Marcus Svanberg.
Despite the large price increases for villas in metropolitan regions, the bid premium has been somewhat lower than the national average in Greater Stockholm and Greater Gothenburg. The biggest difference is between the starting price and the final price of villas in Greater Malmö. Here, the average final price will be 13 percent, or SEK 588,000, higher than the starting price. The largest increase, in kronor, takes place in the residential market in Greater Stockholm, where the price increases by an average of SEK 755,000 before the sale ends.
– Anyone looking for a new home should be aware that prices are at high levels. Before bidding, it is important to make a clear budget and take into account how rising interest rates, reintroduced amortization requirements and changed working conditions would affect the household's finances, says Marcus Svanberg.