Swedish Households Tighten Spending as Rising Housing Costs Bite

Swedish households are showing signs of restraint as rising housing costs eat into disposable income, according to fresh data from Statistics Sweden and Eurostat.

Household consumption indicators for late summer 2025 point to modest growth, with spending in weeks 34–37 up by 0.3% compared with the previous four weeks, and about 1.5% higher year-on-year in constant prices. The gains are concentrated in essential categories, while discretionary outlays remain subdued. Economists say this pattern reflects a cautious mood despite the absence of a sharp economic downturn.

Financial accounts for the second quarter of 2025 underline this caution. Households accumulated roughly SEK 157 billion in liquid assets, while net borrowing climbed to SEK 44 billion. Loan growth has edged up to 2.2% year-on-year, but the preference for building savings buffers shows that many families remain wary of economic risks.

Housing costs continue to dominate the financial landscape. Average monthly rents for new-build apartments reached SEK 7,664 in 2024, according to SCB data, with increases particularly sharp in Stockholm, Göteborg, and Malmö. Independent estimates suggest new-rent growth of around 6% last year, outpacing wage growth in many sectors.

The burden is particularly heavy for renters. Eurostat data show that by December 2024, 13.2% of urban households in Sweden were spending more than 40% of disposable income on housing costs, compared with an EU average of about 9.8%. Among tenants in market-rate rentals, the figure was close to 18%, underscoring how affordability pressures weigh more heavily on renters than on homeowners. Earlier OECD studies confirm that low-income private renters are the group most likely to face severe housing cost overburden, while lower-income owner-occupiers with mortgages typically devote far less of their income to housing.

The strain is shaping household behaviour. While essential purchases continue, discretionary spending has been slow to recover, and households are maintaining unusually high cash balances. Analysts say this combination reflects both ongoing inflationary pressures and uncertainty about future interest rate moves.

For the property sector, the signals are mixed. Strong demand for urban rental housing is keeping occupancy high and supporting income growth for landlords, especially in energy-efficient new stock. Yet the scope for further rent increases is limited by affordability constraints and the risk of regulatory intervention. Developers, meanwhile, face uneven prospects: construction activity has slowed outside the largest cities due to high financing costs, expensive building materials, and uncertain demand, raising concerns about supply bottlenecks in coming years.

Compared with its Nordic peers, Sweden faces one of the highest rent burdens in cities, higher than Finland and above the EU average. This helps explain why Swedish households appear more defensive than headline growth figures suggest. With housing absorbing a rising share of incomes, consumption growth is likely to remain modest, as households continue to balance everyday needs against the necessity of preserving financial resilience.

Source: comp.