Swedes more upbeat on housing prices as rate cuts provide relief

SWEDES’ expectations on home prices rose slightly after the country’s central bank continued with its easing campaign and outlined a plan for accelerated interest-rate cuts.

SEB AB’s monthly housing-price indicator rose by 4 points in September from the previous month, to 47, as 58 per cent of respondents expect the value of homes to increase. While prices have recovered somewhat after a 2022 rout that was one of the worst in the developed world, they remain more than 20 per cent below their peak that year when adjusted for inflation, according to data from state-owned lender SBAB.

“The current situation in the housing market is a balance,” SEB economists Marcus Widen and Daniel Bergvall said in a statement on Monday (Sep 9). “On the one hand, households’ economic situation is improving, but on the other, there is a record supply of homes for sale and the underlying price trend is sideways.” 

Sweden’s Riksbank has said it may take its benchmark rate, currently at 3.5 per cent, as low as 2.75 per cent by year-end. While that could fuel a recovery in housing prices, mortgage rates fixed on longer terms are already pricing in a series of cuts. Households in SEB’s survey on average expected the rate to be at 3.1 per cent in 12 months. 

The Swedish housing market was one of the world’s worst affected when inflation accelerated in 2022, and most economists expect prices to recover at a modest pace going forward.  BLOOMBERG