DETERMINANTS OF HOUSING PRICES IN SWEDEN : Study of Stockholm, Göteborg and Malmö

Abstract: This study examines the dynamic relationship between house prices, disposable income, lending rate to households, housing supply and population in the three Swedish metropolitan areas of Stockholm, Göteborg and Malmö, using a vector error correction model (vecm). The study uses quarterly data for the Swedish economy and applies the vecm methodology in revealing this dynamic relationship from 2000 – 2022. Statistically significant relationships reveal dependencies among these variables; such as the positive relationship between house prices in previous periods and current periods. There are other unprecedented results which would require a deeper-dive to reveal any structural distortions that may exist in the Swedish housing market; such as the negative relationship between past values of housing supply and disposable income in Stockholm. Lending Rate across the 3 metropolitan areas shows the relatively fastest long-run adjustment.