Swedish housing prices rise for sixth consecutive month

SWEDISH housing prices gained for a sixth straight month in June as declining borrowing rates boost the Nordic nation’s economic prospects.

The average price of Swedish homes rose 0.2 per cent, according to data from state-owned lender SBAB. That’s a 6.6 per cent increase so far this year, partly reversing a rout that shaved 15 per cent off values in the last eight months of 2022.

“Housing prices in June developed somewhat stronger than they typically do during this time of the year,” SBAB chief economist Robert Boije said. “It will be an interesting fall, as additional rate cuts may increase willingness to close housing deals, while a very large supply of homes for sale should constrain price increases.”

The housing market recovery comes after the Swedish central bank, the Riksbank, started to reduce borrowing costs in May, and indicated last week that it will cut its benchmark rate another two or three times before the end of this year. As a result, mortgage rates have started to decline after reaching a 16-year high late last year.

Combined with falling rates of inflation, the easing has bolstered growth prospects. The country’s National Institute of Economic Research now expects a 1 per cent economic expansion this year, following a slight contraction in 2023. BLOOMBERG