Swedish housing market shows signs of additional easing in June

The HOX/Valueguard data has indicated that Sweden’s housing market is showing additional signs of softness in June. The HOX composite measure of house and apartment prices both fell 1.5 percent last month, more than the usual 2005-2015 pattern of a 0.4 percent decline. On average, prices of house continue to increase at a yearly rate of 9.6 percent, quite above the average of 7 percent year-on-year since 2005.

The weakness in price in June was broad based. Only Malmö houses jumped the trend, but just marginally, increasing 0.3 percent in June. Moreover, turn-over was low, an impact triggering partially from the greater-than-usual turnover before amortization needs became effective from June 1, said the realtor organization Mäklarstatistik.

“We expect low turn-over and weak price developments in July as well, for seasonal reasons if nothing else,” noted Nordea Bank in a research report.

Housing market in Sweden is projected to decelerate beyond the seasonal effects as mortgage rates have stopped dropping, according to Nordea Bank. Participants of the financial market would keep an eye on a significant rebound in prices and turnover in August, which is generally a solid month.

The HOX/Valueguard’s data underpins the view of a persistent slowdown of the housing market, and should stimulate the risks of housing market risk premium in the SEK this autumn, said Nordea Bank.