Swedish property market has 'not yet hit rock bottom' as prices keep falling
Swedish property prices are generally still falling and at least one expert believes they will keep doing so for a little while yet. But the housing market is in remarkably good shape all things considered.
Property prices fell 1.1 percent in October, according to Sweden’s state-owned mortgage bank SBAB’s housing site Booli. Apartment prices saw the biggest drop (down 1.8 percent), especially in the big city regions of Greater Stockholm, Greater Gothenburg and southern Sweden.
The price of a detached home meanwhile fell 0.7 percent, but varies significantly depending on where in Sweden you’re selling a house. In central Sweden, house prices fell almost 3 percent last month, whereas prices actually rose in Greater Malmö and northern Sweden.
Adjusted for seasonal effects, house prices are ever so slowly rising nationwide, too.
“If I had known a year and a half ago that inflation would be this high and that mortgage rates would quadruple, I would have predicted more drama on the housing market than we’ve actually had,” SBAB’s chief economist Robert Boije told Swedish news agency TT.
Households’ savings accounts have contributed to prices not falling more rapidly.
“During the pandemic, people couldn’t keep up their usual consumption and many people probably increased their savings by quite a lot. But when these buffers start to wear thin, what happens then? We probably haven’t seen rock bottom yet,” said Boije.
Property prices have fallen almost 14 percent from their peak last spring, with the price of a detached home falling 15 percent and bostadsrätt homes (a Swedish type of condominium) falling 10 percent. But SBAB predicts that prices will keep going down.
“We haven’t seen the full effect of interest rate hikes on the housing market yet. We think that prices will fall 20 percent from the peak [in spring last year] before things turn upwards again,” said Boije.
Sweden’s central bank, the Riksbank, is set to make its next interest rate announcement on November 22nd which will have an indirect effect on mortgage rates and the housing market.
It has previously said it expects to hike the rate once more, but both the European Central Bank and the US Federal Reserve left their interest rates unchanged in the past month, which increases the likelihood of Sweden holding steady too.
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Property prices fell 1.1 percent in October, according to Sweden’s state-owned mortgage bank SBAB’s housing site Booli. Apartment prices saw the biggest drop (down 1.8 percent), especially in the big city regions of Greater Stockholm, Greater Gothenburg and southern Sweden.
The price of a detached home meanwhile fell 0.7 percent, but varies significantly depending on where in Sweden you’re selling a house. In central Sweden, house prices fell almost 3 percent last month, whereas prices actually rose in Greater Malmö and northern Sweden.
Adjusted for seasonal effects, house prices are ever so slowly rising nationwide, too.
“If I had known a year and a half ago that inflation would be this high and that mortgage rates would quadruple, I would have predicted more drama on the housing market than we’ve actually had,” SBAB’s chief economist Robert Boije told Swedish news agency TT.
Households’ savings accounts have contributed to prices not falling more rapidly.
“During the pandemic, people couldn’t keep up their usual consumption and many people probably increased their savings by quite a lot. But when these buffers start to wear thin, what happens then? We probably haven’t seen rock bottom yet,” said Boije.
Property prices have fallen almost 14 percent from their peak last spring, with the price of a detached home falling 15 percent and bostadsrätt homes (a Swedish type of condominium) falling 10 percent. But SBAB predicts that prices will keep going down.
“We haven’t seen the full effect of interest rate hikes on the housing market yet. We think that prices will fall 20 percent from the peak [in spring last year] before things turn upwards again,” said Boije.
Sweden’s central bank, the Riksbank, is set to make its next interest rate announcement on November 22nd which will have an indirect effect on mortgage rates and the housing market.
It has previously said it expects to hike the rate once more, but both the European Central Bank and the US Federal Reserve left their interest rates unchanged in the past month, which increases the likelihood of Sweden holding steady too.
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