Fewer Swedes believe in rising home prices: SEB

Fewer Swedes believe in rising home prices: SEB
The proportion of Swedish households that believe that housing prices will continue to rise has decreased, according to Swedish bank SEB's latest housing price indicators.

However, a majority, or 51 percent, still believe housing prices will continue to increase, the bank announced on Wednesday. Last month, the figure was 55 percent.

The proportion expecting prices to fall has risen to 19 percent from 14 percent.

“From an economic perspective, it is good to have a little cautious optimism among households. That should allay fears that lending is increasing much more than the rise in wages,” said SEB economist Gunilla Nyström.

Households have embraced the fact that housing costs will rise in the future and that interest rates will continue to rise in line with a stronger business cycle.

“In addition, the debate has been very lively over the weekends about more stringent mortgage repayment requirements and worsening mortgage interest tax breaks to dampen the desire of households to borrow,” said Nyström.

However, many still believe in the continued rise in housing prices.

“The arguments for (rising prices) are also strong. We have a strong Swedish economy, falling unemployment and a stock market rising over 20 percent. At the same time, there has been too little construction for a long time, which keeps demand high, especially in big cities,” she warned.

With Sweden’s central bank, the Riksbank, raising interest rates, consumer expectations are also growing that the repo rate will remain at current levels for a year. The expectations are now close to the Riksbank’s own forecasts, said Nyström.

The survey was based on 1,000 interviews conducted by Demoskop from January 3rd to 11th.

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