Swedish home prices swell with buyers expecting rate cuts

SWEDISH home prices rose for a third month as buyers expect some relief from lower borrowing costs.

Apartment prices rose by 1.5 per cent in April from the prior month, while the average price of detached houses increased by 0.9 per cent, according to data published on Wednesday (May 8) by Svensk Maklarstatistik, which is owned by the Association of Swedish Real Estate Agents. Average prices for both categories of dwellings are now higher than they were a year ago.

The data comes as the Swedish central bank is expected by most economists to cut its benchmark rate on Wednesday for the first time in eight years.

While the projected change to 3.75 per cent from 4 per cent will not make a huge difference for heavily indebted households, it may be the first in a series of easing moves that would reduce borrowing costs and provide relief to Sweden’s economy after four straight quarters of contraction.

A severe housing price rout in 2022 led to a plunge in new home construction, which together with falling consumption prompted a recession in the Nordic nation.

While prices remain around 10 per cent lower in nominal terms than before the slump, housing starts are showing signs of stabilisation, albeit at a historically low level.

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In April, activity on the housing market also picked up pace, as the number of transactions on the housing market was 24 cent higher than a year ago, according to Maklarstatistik’s data.

“The market is showing strength with broad price increases, bidding wars and an increasing number of closed deals,” the association’s chief executive, Oskar Oholm, said. BLOOMBERG