Until recently, Stockholm appeared to have bucked the housing downturn. The Swedish capital’s prime property values have risen annually by three to 10 per cent in all but one of the past five years. However, this year prices have started to dip because of reduced mortgage availability and market inertia caused by heavy regulation.

One of the factors that had helped to keep prices buoyant is the low level of house building throughout the country. Only 12,000 to 18,000 new homes have been constructed each year since 2007. This is despite high demand thanks to a long-term shift from renting to ownership: some 65 per cent of homes are owner-occupied today according to Maklarsamfundet , the country’s association of estate agents, compared with 50 per cent a decade ago.

Although new tram lines and offices are under construction in Stockholm, there is little new house building. The capital’s oldest areas have few empty plots between tall 17th and 18th-century terraces; most other suburbs have densely packed apartments, some dating from the 1920s but the majority built since the 1970s, set in long rows of grey or red low-rise blocks.

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