Swedish home prices regain some ground as interest rates decline

HOUSING prices in Sweden rose in August as rate cuts by the country’s central bank have made it less expensive to finance home purchases, data from state-owned lender SBAB showed. 

Statistics from the bank’s property listings site Booli indicate that home prices rose 2 per cent in August compared with the previous month. The reading comes as the Riksbank has launched an easing campaign that has so far taken its benchmark rate to 3.5 per cent from a peak of 4 per cent.

“It will be interesting to see what happens as the Riksbank has lowered interest rates for a second time and flagged additional cuts before year-end,” SBAB chief economist Robert Boije said in a statement. “Longer-term rates typically have the largest impact on housing prices, and they have already declined, with no major additional drop expected. Hence, that should be priced in, and we should expect declining prices during the fall.”  

On seasonally adjusted terms, prices rose by 1 per cent in the month of August. While Swedish housing prices have gained about 8 per cent in nominal terms this year, they have yet to recover from a 2022 plunge that was set off by rising interest rates.  BLOOMBERG