Swedish housing price recovery fuelled by interest-rate cuts

SWEDISH home prices rose in May as the country’s central bank started unwinding a tightening campaign and consumers became more upbeat about the economy. 

Apartment prices rose by 1.6 per cent, while the average price of detached houses increased by 1.2 per cent, according to data published on Wednesday (Jun 5) by Svensk Maklarstatistik, owned by the Association of Swedish Real Estate Agents. The revised figures showed that the value of both categories has increased for five consecutive months. 

The data comes as a number of indicators have fuelled optimism about Sweden’s economic prospects. In May, consumer confidence rose while manufacturing activity reached its highest level in two years, and the country’s third-largest bank on Tuesday raised its forecast for growth this year.

For a housing market that plummeted as interest rates rose, lower borrowing costs should have a relatively rapid impact, as most Swedish mortgages have interest-rates fixed for three months.

Oskar Oholm, chief executive at the real estate agents’ association, said that while the supply of homes for sale remains unusually large, the number of transactions is rising.

“The fact that buyers and sellers are able to find common ground and close deals is a sign that we are approaching a more normal market,” he said. BLOOMBERG