Sweden’s housing market continued to seek a bottom at the start of the year, beset by falling activity after ten months of consecutive price declines. The largest Nordic country is enduring one of the biggest routs in residential real estate globally, as home values have almost erased their pandemic-era gains after the end of ultra-low interest rates.
House and apartment prices are down 15 per cent from their peak after a 1 per cent decline for both categories in January, according to data published by realtor organisation Svensk Maklarstatistik.
The figures are in line with the HOX Valueguard index, which combines apartments and houses and is tracked by the central bank. Most forecasters expect a 20 per cent peak-to-trough fall, adjusted for seasonal variation, which implies that about a third of the decline is still ahead.
Still, the Riksbank’s new governor, Erik Thedeen, said that the housing slump should not be overdramatised, since an orderly retreat could be beneficial as it would make it easier for people with limited financial resources to buy homes. In January, transaction volumes for flats fell 27 per cent from a year earlier, while the decline was 14 per cent for detached houses.
The Riksbank has been battling the biggest price increases in three decades. It is widely expected to lift its key interest rate by half a percentage point at its meeting this week, to 3 per cent from the current 2.5 per cent. Forward-rate agreements show that the market is expecting at least one more quarter-point hike thereafter.
