Sunday, 6 September 2026
Sweden’s residential investment market accelerated sharply during the second quarter of 2026, with transaction activity rising as institutional investors returned to the sector despite a considerably weaker housing development pipeline. Residential property transactions reached SEK 22.5 billion during the quarter, an increase of 57% compared with the same period of 2025. Housing accounted for approximately 28% of investment across all Swedish property sectors, making it the country’s largest investment segment by transaction volume during the period. The number of residential transactions also increased by 41% year-on-year to 62 deals.
The improvement comes as the broader Swedish investment market experiences a significant recovery. Total property transaction volume reached approximately SEK 80 billion in Q2, representing an increase of 146% from a year earlier. Residential assets therefore captured more than a quarter of the capital deployed during the quarter.
Large portfolio transactions played an important role in the resurgence. The combination of Sveafastigheter and KlaraBo created a residential company with properties valued at approximately SEK 47 billion. Connected with the transaction, KlaraBo acquired around 4,100 apartments from SBB for approximately SEK 6.8 billion. KPA Pension, part of the Folksam Group, also acquired 26 residential properties from SEB’s Domestica funds, comprising approximately 2,500 apartments and 150,000 sqm across the Stockholm-Mälardalen region, Malmö and Lund.
Development-stage rental housing also attracted investment. JM agreed to sell three projects containing a combined 304 apartments in Upplands Väsby, Uppsala and Solna to Hemvist for approximately SEK 1.1 billion. The properties are scheduled for completion between 2027 and 2029.
Pricing indicators suggest that renewed demand is translating into firmer investment values. The prime yield for newly developed residential property in Greater Stockholm stood at 3.85% during Q2, approximately 30 basis points lower than a year earlier. International investors represented only 7% of residential investment during the quarter, indicating that domestic capital continues to account for the majority of activity.
The investment recovery contrasts with conditions in the construction market. Sweden completed 38,851 multifamily apartments in 2024, but that figure dropped to 25,792 in 2025. Boverket has subsequently lowered its expectations for new construction and now anticipates approximately 22,000 multifamily housing starts in 2026 and 27,100 in 2027, compared with previous forecasts of 26,100 and 28,200 respectively.
The slowdown is also exposing increasingly significant differences between individual Swedish housing markets. The number of municipalities reporting housing shortages declined from 127 to 102, suggesting that supply and demand are becoming better balanced nationally. However, 42 of the municipalities still reporting shortages are located within the Stockholm, Gothenburg or Malmö metropolitan regions. Sweden’s national residential vacancy rate remained low at 1.3% in 2024.
Rental indicators remain comparatively stable in Stockholm. Prime annual rents for newly developed residential properties in Greater Stockholm were estimated at SEK 3,000 per sqm in Q2, unchanged from a year earlier. Average Greater Stockholm rents stood at SEK 1,693 per sqm annually in 2025, an increase of 6.5% compared with 2024.
Conditions have also improved in Sweden’s owner-occupied housing market. Condominium prices were 4.4% higher year-on-year in May, while house prices increased 2.2%. Approximately 49,100 homes changed hands during the three months to May, around 9% more than during the equivalent period a year earlier.
Changes to mortgage regulations may be contributing to stronger purchasing activity. From April 2026, Sweden increased the maximum loan-to-value ratio from 85% to 90%, reducing the minimum deposit from 15% to 10%, while an additional amortisation requirement introduced in 2018 was removed. Early analysis cited in the report indicates that the changes have so far had a clearer effect on transaction activity than on prices, particularly in the condominium market.
Financing conditions have also improved substantially from the previous interest-rate cycle. Following its June meeting, the Riksbank maintained its policy rate at 1.75%, leaving cumulative reductions since May 2024 at 2.25 percentage points. Lower borrowing costs have gradually strengthened household purchasing capacity, although inflationary pressure could affect the future direction of interest rates.
Sweden’s residential market is therefore entering a different stage of its recovery. Investment volumes and transaction numbers are rising rapidly while prime yields have compressed, yet construction remains subdued and housing shortages are becoming increasingly concentrated in the largest metropolitan areas. For investors, this divergence could become one of the defining characteristics of the Swedish living market, with capital returning faster than new housing is being produced and increasingly different supply-demand conditions emerging between the major metropolitan regions and smaller municipalities.
Source: CBRE Sweden
