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Fast Comment SwedenHousing prices in March

  1. Housing prices down by 0.3 percent in monthly terms (S.A.)
  2. The stricter amortisation requirement has affected the activity
  3. Stabilisation in sight?
Housing prices down by 0.3 percent in monthly terms (S.A.)
According to Valueguard's HOX index, housing prices were unchanged compared to February. Seasonally-adjusted, prices decreased by 0.3 percent in monthly terms in March, following a 0.9 percent drop in February (according to our calculations). This implies that the 12-month percentage change decreased further, from -3.7 percent in February to -4.5 percent in March. In March, Gothenburg had the biggest price declines, even though the decline was smaller than in previous month. All in all, prices have fallen by 6.4 percent since the peak last summer.
The stricter amortisation requirement has affected the activity
Even though the number of housing units up for sale on Hemnet, as well as the number of units sold, decreased in March compared to February, the activity is pretty much in line with previous years. As mentioned in the preview comment, new construction has continued to add supply to the market. Therefore, it is likely that the supply of homes for sale will be elevated for a prolonged period. That said, we expect housing prices to level out. Moreover, we expect that the temporary effects coming from changed buying and selling behaviour and the introduction of the amortisation requirement will fade. The amortisation requirement is likely to have a dampening effect on house prices in high-priced regions ahead, even though the price effect is not estimated to be particularly large in Sweden as a whole according to FSA (Financial Supervisory Authority).
Stabilisation in sight?
Despite recent house price declines, consumer confidence is still high and we see no signs of spillover effects into households' perceptions of their personal situations. Notably, households are not worried about becoming unemployed. Strong global demand and low interest rates will support the economy ahead. Lots of uncertainty remains, but we believe that we are gradually moving toward stabilisation.



 


Source: Valueguard and Handelsbanken


Broad-based price decline since September


Source: Valueguard, Macrobond

 
Stabilisation in sight?


Source: Valueguard, Macrobond

Number of transactions dropped in March, the first month after the introduction of the strengtened amortisation requirement


Source: Svensk Mäklarstatistik, Macrobond

Global demand, here illustrated by the Purchasing Managers' Index for the eurozone, supports the economy


Source: Macrobond


Disclaimer

Helena Bornevall

Senior Economist

Scenario Analysis

hebo12@handelsbanken.se

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