Picture used for illustrative purpose. File

Gulf Today Report 

The price of single-family homes in Sweden has surged by 17% in the first three months of the year, according to data.

The data indicated concerns of market overheating. Svensk Maklarstatistik, an association of real estate agents, added that the rise was a record from when it started collecting data in 2005.

"Big price rises are usually followed by a recoil," Hans Flink, head of sales at Maklarstatistik said. "I wouldn't call it a bubble, but there could be a reverse."

Sweden’s population has grown rapidly over the years and housing construction has failed to keep up with the growth. 

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The rental market is highly regulated and widely seen as dysfunctional. At the same time, ultra-low interest rates have pushed up prices and borrowing levels, leading the central bank, among others, to fret about the threat to the banking system.

However, the pandemic didn’t affect growth as much as expected, partly due to Sweden not imposing strict restrictions.

Ultra-low mortgage rates - the average is around 1.3% for a floating-rate loan - may also start to rise. Furthermore, the financial watchdog has said it will restore stricter mortgage repayment rules, suspended at the start of the pandemic, later this year.