Swedes signal the worst of housing price rout is in the past

SWEDISH households’ view on the housing market has stabilised, as a price drop triggered by rising interest rates may be moderating.

Sentiment has been largely unchanged for three consecutive months, in a sign that households believe the worst is behind them, according to European financial services group SEB. The largest Swedish bank’s Housing Price Indicator improved one unit in April, from -9 to -8. 

While households still expect some decline, their view has brightened since August last year, when the indicator plunged to a record low. That drop coincided with a housing rout that shaved some 15 per cent off prices, in one of the worst examples of a global property downturn in the wake of rising inflation and higher borrowing costs.

The Swedish Riksbank is expected to raise interest rates further this month, and despite some stabilisation in recent house price data, SEB believes home prices may drop further, bringing the total decline to 20 per cent from a peak in February 2022. 

“Given continued headwinds for households, we think that some further downward pressure on prices is reasonable going forward,” SEB economists Daniel Bergvall and Marcus Widen said. BLOOMBERG