Swedish housing prices rise again as rate cuts expected
Housing prices in Sweden rose in March, indicating that optimism about borrowing costs are aiding a recovery in a market that saw deep plunges when interest rates rose.
Last month, home prices rose 1.9 per cent, according to statistics from state-owned lender SBAB published on Tuesday (Apr 2). The data, derived from its property listings site Booli, suggests a nascent recovery, following a 15 per cent slump in 2022 that made Sweden a poster child of rising interest rates’ impact on housing markets globally. Last year, home prices trended largely sideways, and in recent months, the prospect of monetary policy easing has fuelled optimism.
Sweden’s Riksbank last week indicated it could take the first step toward lower borrowing costs before peers such as the European Central Bank by cutting its benchmark interest rate to 3.75 per cent from 4 per cent as early as next month. At the same time, it warned consumers not to get ahead of themselves and increase spending in anticipation of lower rates, as this could lead to a rebound in inflation.
“It will be interesting to follow the development in the coming months as seasonal effects wane, and there are factors that could influence prices in both directions,” SBAB’s chief economist, Robert Boije, said in a statement. “A very large supply of homes for sale speak in favour of a subdued price development, while a prolonged period of low transaction activity has created a pent-up need to move, which could provide upward pressure.” BLOOMBERG
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