Swedish house prices ‘dangerously high’: report

Sweden has one of the most overvalued housing markets in the world, according to a new report, while new figures indicate that the long climb in prices may be grinding to a halt.

Swedish house prices 'dangerously high': report

Only Hong Kong, Australia and France are considered to have more inflated prices.

Housing prices are described as “dangerously” high in the report by financial newspaper The Economist, which has based calculations on both nominal and actual prices, as well as prices in relation to household income and banks’ interest rates.

However, it seems as though a steeply rising price development may now be coming to a halt. In 2010 house prices in Sweden rose by 10.7 percent. The latest twelve months, however, have seen a rise of no more than 2.2 percent.

The latest survey on Swedes’ expectations of future housing prices and interest rates, published by Swedish bank SEB on Monday, showed a similar trend.

The percentage of households who believe prices will drop has increased greatly over the past month, from 22 to 33 percent, and those who believe will continue to rise are no longer in the majority, dropping from 51 to 42 percent.

“This is a dramatic fall, we’ve rarely had such a steep drop in just one month,” said SEB’s private economist Gunilla Nyström to news agency TT.

“The crisis in Greece and rising interest rates, which for many households have lead to a tighter budget compared to last year, are likely explanations to this more negative attitude to the housing market,” she said in a statement.

SEB’s survey is based on interviews with 1,000 Swedes.

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Swedish economy beats growth expectations

Sweden's economy grew by 0.6 percent in the first quarter from the previous three-month period, Statistics Sweden (Statistiska centralbyrån - SCB) said on Wednesday as it released fresh data that beat expectations.

Swedish economy beats growth expectations

“Sweden’s position in Europe remains strong,” Statistics Sweden said, noting Sweden had experienced growth that was “significantly higher than the European average.”

The growth, the strongest recorded in Sweden since the second quarter last year, is significantly higher than analysts’ forecasts.

They had predicted the economy would see weak growth, be flat or even contract, with a survey by Dow Jones Newswires forecasting an average increase of 0.3 percent.

Sweden’s first quarter economic health contrasts sharply with that of countries in the eurozone, of which it is not a member.

Many eurozone countries have registered weak quarterly data, such as Germany which reported 0.1 percent growth, or were in recession, such as France which saw its economy shrink by 0.2 percent.

Sweden’s “upside surprise is mainly due to stronger inventories” while “domestic demand (was) mixed,” SEB bank analyst Erica Blomgren commented on Twitter.

She said “private and public consumption (were) stronger than expected but investments (were) very weak.”

AFP/The Local/at

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