Swedish home prices rise above expectations in April

Swedish home prices rose a bit above expectations in April, and the market shows signs of stabilization. On a seasonally adjusted sequential basis, home prices rose 0.4 percent, showed the data from HOX Valuegaurd. Prices dropped 4 percent on a year-on-year basis. Prices rose slightly above expectations in Stockholm, where apartment prices rose 1.3 percent sequentially, and fell 8.5 percent year-on-year.

Compared to the marked downturn last fall, home prices have stayed fairly stable in the first four months of 2018; consistent with the view of stabilization. Moreover, weekly statistics for May imply fairly stable prices for the first half of the month, noted Nordea Bank in a research report.

Transaction volumes dropped in March and April, possibly because of the new amortization rules that were introduced on 1 March. But until the usually busy May it is difficult to assess if this is a temporary or more permanent change in trend.

The high supply, in particular for newly built homes, is a continued risk factor for a continued drop in home prices.

“However, to see another marked fall in home prices, households’ housing costs must probably increase – something we do not expect to happen in the near term”, added Nordea Bank.

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