Sweden’s troubled home construction sector shows signs of life

SWEDEN’S home construction sector is showing tentative signs of recovery after shrinking, as interest rates surged and housing prices plunged.

A housing-start indicator from data provider Byggfakta published on Wednesday (Mar 20) rose by 3.3 per cent last month, indicating that the level of activity in the sector has increased from a trough in August last year, revised data showed. Even so, the gauge remains 57 per cent below a peak in August 2021.

“The housing indicator shows that housing starts have recovered somewhat from previous lows, possibly as a more benign outlook on interest rates has led to less pessimism among developers,” Tor Borg, head of analysis at Byggfakta, said in a statement.

“A lot of uncertainty remains, however, and it cannot be excluded that the numbers will be revised downwards.”

Swedish homebuilders have been pummelled by a drop in housing prices while construction costs and interest rates have increased.

While Byggfakta’s indicator backs up earlier data showing the market appears to have stabilised, it remains at a level that is consistent with only about 20,000 homes being started annually. That is less than a third of what authorities estimate would be needed to avoid exacerbating existing shortages. BLOOMBERG