THE outlook for Sweden’s housing market remains bleak in November amid this year’s 10 per cent decline in prices from peak levels, according to the latest data. 

House prices in the biggest Nordic country are forecast to drop as much as 20 per cent, in a sign of what may be to come in other markets, where home costs rose sharply during the pandemic. That makes Sweden a bellwether for a global housing cooldown, as soaring inflation rips through household budgets and rising borrowing costs begin to bite.

About 55 per cent of Swedish households expect prices to continue sliding, with just 22 per cent expecting gains, according to a housing-price indicator published by lender SEB AB on Monday (Nov 7). While the number shows a slight improvement, it is “one of its lowest readings ever”, SEB analysts said, adding that their “view on Swedish home prices ahead is still bleak”.

“Consumer confidence continues to be depressed; in particular, consumers’ view of their own finances is at rock bottom,” the bank said. “Given the nature of the current cost crisis, it is unsurprising that general confidence is poor, and views on household finances are even worse.”

The Nordic region’s largest bank, Nordea Bank, has also adjusted its forecast to reflect a steeper decline in home prices than previously seen. It now expects a 20 per cent drop, down from a previous forecast of 15 per cent, and said that development is likely to create problems in other parts of the economy.

“For example, it usually leads to households tightening their purse strings,” analysts including Nordea’s Annika Winsth and Gustav Helgesson said. “We consequently expect a marked fall in household consumption next year.” BLOOMBERG

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