Home sales in Sweden likely to drop noticeably

In the initial four months of 2016, Sweden’s house prices grew. Even if the rate of rise seems to have decelerated slightly, there are no indications of easing of Sweden’s housing market. However, a likely cooling down of the Swedish housing market might be seen in the sales before prices.

If the supply market is narrowed, the prices can be high for a brief period of time. However, according to HOX/Valueguard data up to and including April indicates that lately, sales have indeed risen, noted Nordea Bank in a research report.

The number of flats purchased in Sweden every month has grown by nearly 40 percent in past two years and is quite higher than the previous record highs. In the same period, there was an increase of 25 percent in the one- and two-dwelling buildings’ sales.

Nonetheless, the rapid growth in sales might be a caution. According to Nordea Bank, it might be a suckers’ rally. It has been witnessed in other nations such as the US and Spain that an upturn is followed by a downturn, even in sales.

The increase in Sweden’s housing sales lately might be an indication that buyers have brought forward their buying before new regulation, said Nordea Bank. On June 1, the requirement of amortisation was set up. Furthermore, additional regulation such as debt-to-income restrictions is in talks. Hence, there is a possibility that sales might fall noticeably from June, added Nordea Bank.

The sales of flats in Sweden might have also surged in recent years due to deregulations of the market for subleasing. Overall, the recent sharp rise in sales might be a hint that moderation is approaching.

“We hold on to our forecast of a slowdown in the housing market,” said Nordea Bank.