Swedish housing starts fall in Q1 2018, likely to decline further going forward

Swedish housing starts fell in the first quarter of this year, probably marking the start of a prolonged downturn. This is expected to be a drag on the economic growth going forward, noted Nordea Bank in a research report.

Statistics Sweden’s preliminary figures indicate that the number of housing starts was 14,450 in the first quarter of 2018, 13 percent down year-on-year. Seasonal adjustment shows that the figure of housing starts stood at 14,600 in the first quarter. This signifies a drop from the fourth quarter and an annual rate of still decent 58,000 apartments, down from unrevised 64,000 for full-year of 2017. The first quarter outcome was slightly below than expected, but there is still no dramatic downturn.

“We expect housing starts to decline further going forward. We look for a decline of 30 percent over the next two years to 45,000 in 2019, with risks tilted to the downside”, stated Nordea Bank.

Last year’s positive contribution to investment growth to 2.5 percentage points from housing would reverse to a negative impact of a largely similar size next year. That is one of the important reasons why the overall investment activity would stagnate next year in spite of rising investment in the public sector and other parts of the private services sector, according to Nordea Bank.

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