Swedish home prices dropped 2 percent sequentially in April, showed HOX/Valuegaurd home price index. The fall in home prices is widespread, although apartment prices fell more than house prices. Apartment prices in Stockholm are falling even more, and fell 3.9 percent on the month. Seasonally effects are small in April, not changing much on the numbers.
Home prices had started rising before the corona crisis began. However, that trend is broken now. Nevertheless, statistics show that May has been stable so far.
But households are pessimistic about home prices, suggesting further risks to home prices in the near term, noted Nordea Bank in a research report. It is not surprising that fall is biggest in Stockholm, where the labor market has been most impacted so far. One out of eight workers in Stockholm have been given notice on either temporary or permanent layoffs. The uncertainty regarding job prospect will continue to be a drag on the housing market.
“All in all, home prices are likely to continue down until the summer. After that, it all depends on the virus and how deep the economic downturn will turn out. In our main scenario, home prices stabilize during the autumn. The housing market is still supported by a low supply and low interest rates, which should support for home prices longer out”, added Nordea Bank.
