Sweden’s home prices fall by most since at least 2013 in latest data

SWEDEN’S housing market rout accelerated to its fastest pace since at least 2013, according to the latest data, raising concern that forecasts for the potential drop in residential property prices may be understated.

As of last month, house prices are down as much as 19 per cent from the peak and apartments cost as much as 13 per cent less, SBAB, whose indicator is based on transaction data from its real-estate listing site Booli, said on Wednesday (Nov 2). The state-owned mortgage lender has forecast a drop of about 20 per cent from the high reached in March, slightly more than Nordea and the Riksbank.

The downturn, fuelled by record-high inflation and increasing borrowing costs, reflects a development seen around the world after home prices surged during the pandemic. In Sweden, a long run of virtually unbroken price gains and mortgage terms that don’t require paying off the loan principal have yielded sharply rising indebtedness, and as many households have variable rates on mortgages, central bank moves to curb inflation have a rapid impact on purchasing power.

Home prices declined by 4 per cent in October from the previous month, or 2.3 per cent on seasonally adjusted terms, SBAB said. That compares with a 2.6 per cent nominal decline in September, which the lender said then was an all-time high.

While there are regional differences, the numbers show declines across the country, with the biggest drop registered for detached houses in Sweden’s second largest city, Gothenburg, which have lost 19 per cent of their value since the peak.

“Prices continue falling, also for apartments, but their decline isn’t as steep as for detached houses,” SBAB chief economist Robert Boije said in a statement. “A possible explanation is that high inflation, and especially the increase in electricity prices, hits harder on the market for detached houses.” BLOOMBERG