SEB's Swedish housing sentiment indicator plunges in April to -20 points
[STOCKHOLM] Swedes turned pessimistic about prospects for the housing market in April as the effects of the new coronavirus hit employment, with SEB's sentiment indicator falling to minus 20 - a record drop for a single month - from 47 points in March.
The index measures the balance between those who expect rising prices and those seeing falling prices over the coming year.
"As yet we have not seen falling home prices in the figures, but this shows that it is what households expect and to a certain extent such expectations can be self-fulfilling," said SEB economist Jens Magnusson.
The coronavirus and the measures taken by authorities around the world to contain its spread have hit economies hard.
Sweden's government expects GDP will shrink 4 per cent this year and, with unemployment set to rise, there are worries that many households will struggle to meet mortgage payments.
Sweden's Financial Supervisory Authority (FSA) said last week it would suspend rules forcing banks to demand mortgage repayments from borrowers.
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The government had already announced a raft of measures to head off mass layoffs, but many firms have already sent workers home or put them on shorter working hours. The government has also eased rules on claiming benefits to soften the blow to individuals.
The Swedish housing market barely reacted to the financial crisis of 2008-2009 but has long been seen as the economy's Achilles heel. Prices have shot up over the last two decades and debt levels in relation to GDP are amongst the highest in Europe.
In recent years, the FSA has tightened lending rules and hiked the buffers banks need to hold against possible loan losses from the mortgage market, but concerns remain.
REUTERS
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