Swedish home prices rebound in January

Swedish home prices rebounded in January after the noticeable downturn in the second half of 2017. Home prices were up 0.7 percent on sequential basis, while it fell 2.1 percent year-on-year, showed the HOX/Valuegaurd data. Nordea Bank had expected home prices to have dropped 0.5 percent sequentially and 3.6 percent year-on-year. Apartment prices in Stockholm were up 0.8 percent sequentially, while it dropped 8.6 percent year-on-year.

Weekly statistics up until last week imply stable development in February as well, noted Nordea Bank. But it might yet be too early to come to this conclusion. Prices might have been stimulated by a temporary run-up as buyers try to close a deal before the stricter amortization rules that would be in place of 1st March. Moreover, the great supply of both existing and new home sales continues to be comparatively high that might continue to drag on prices in the spring.

Moreover, the recent turmoil on the stock market might be a drag on prices although the correlation between house prices and equity prices has been rather subdued.

“To see a continued slump in home prices, it will likely also require higher housing costs. As long as mortgage rates remain low, which we expect, this will give support to prices”, added Nordea Bank.

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