Sweden’s housing market rout still has some way to go according to projections by the central bank, after a year of declines wiped out 15% of home values in the biggest Nordic economy.
(Bloomberg) — Sweden’s housing market rout still has some way to go according to projections by the central bank, after a year of declines wiped out 15% of home values in the biggest Nordic economy.
The slide in residential property prices will extend to about 20% before a trough at the end of the year, the Riksbank said, keeping to a prior estimate. Its forecast contrasts with gloomier assessments for the size and duration of the slump from some economists, including at Danske Bank A/S.
The world’s oldest central bank, which raised its key interest rate to 3.5% on Wednesday, said it’s seeing signs of stabilization — and latest realtor data backs up that assessment. Sweden’s downturn is among the biggest housing slumps globally, and has paralleled those in Canada and Australia, among others.
The price declines, combined with higher construction and funding costs, have also led to a slowdown in housing construction, the central bank said, adding that “in 2023 and 2024, construction will continue to decline significantly and weigh on Swedish gross domestic product.”
Danske’s economists said earlier this month they expect home prices in Sweden to fall 25% from the top, based on the outlook of significantly extended monetary tightening by the Riksbank. Under alternative scenarios, prices may continue to stabilize or face a deeper decline than projected, the central bank said.
Read More: Swedbank Forecasts Tough Years for Sweden as Households Squeezed
–With assistance from Niclas Rolander.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.