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House price climb cools off in July

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House price climb cools off in July
08:41 CEST+02:00
The increase in Swedish housing prices has ceased with prices in greater Stockholm falling by 4 percent over the past month, according to new figures from Mäklarstatistik which attributes the impact of the pending general election.

The house price climb which has begun to raise the concern of the Riksbank, which raised interest rates in July for the first time since 2008, appears to have eased with average apartment prices down 6 percent in July and houses falling 1 percent nationwide.

But in the central areas of Sweden's major cities the prices remained stable. In Gothenburg apartment prices in fact climbed by 5 percent, the new market report from Mäklarstatistik shows.

Jeanette Gustafsdotter at the Association of Swedish Real Estate Agents (Mäklarsamfundet) considers it too early to conclude that the climbing prices have now change direction, even if rising interest rates and a mortgage cap indicate a likely cooling off.

"I would first like to have a look at how the next couple of months develops before I talk about a change in the trend, a month in the middle of summer is no solid reference month," Gustafsdotter said.

"But Stockholm usually leads the national market and there you can see a decline for the second month in a row. So there are indications of a price decline," Gustafsdotter said.

In greater Stockholm apartment prices fell by 2 percent in July, while they climbed 1 percent in central areas. In greater Gothenburg apartment prices remained the same, while in greater Malmö they fell by 2 percent.

House prices in greater Stockholm fell by 4 percent, and by 3 percent in greater Gothenburg, while in greater Malmö they climbed by 1 percent.

Higher mortgage costs, as a well as the decision by the Financial Supervisory Authority (Finansinspektionen - FI) to introduce a mortgage cap at 85 percent of a home's market value, are factors that are designed to cool the market. Gustafsdotter argued that a further factor could be the September general election.

"It is naturally not the most important factor but if the Red-Green coalition wins then we could see higher property taxes. This could mean that some people would wait a little," she said.

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