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Fast Comment SwedenPreview: House prices in April (Wednesday)

  1. A quiet April?
  2. The index mainly captures developments in the larger cities
  3. Dampened demand for new production, but need for construction still exists
A quiet April?
In March, we saw subdued activity in terms of the number of new housing ads, and the number of sales completed fell back after being higher than normal in the previous months. At the same time, house prices were close to unchanged compared with February, with some local variations. For April, Booli's weekly data indicate little drama. We expect fairly flat developments in house prices in April.
The index mainly captures developments in the larger cities
Since house prices peaked last summer, they have fallen by about six percent, according to the HOX index. The media focus has largely been on developments in the Stockholm region, where the fall in house prices has been the largest, buying and selling behaviour has changed the most, and nearly a third of the country's new production is taking place. In Gothenburg and Malmö, prices have also lost ground. However, the price changes in smaller communities may differ from these larger cities, and from the HOX total index, which is weighted by value and only captures developments in the municipalities with the highest number of sales. Still, even though all regions have not experienced price falls, it seems as if the previously high rate of price increases has slowed overall.
Dampened demand for new production, but need for construction still exists
In April, the number of homes for sale on the Hemnet website has continued to fall back to more normal levels. However, these statistics do not capture new production particularly well. According to Booli statistics, half of the homes for sale are the result of new construction, i.e. housing that is under construction and is bookable. This is clearly a higher proportion than before and reflects the fact that the construction rate is high, that it is not as attractive as before to subscribe to new production far in advance, and likely that some of these new builds are too highly priced for today's housing market. We will be following this closely, along with the building companies’ perception of the demand for housing, the projects being implemented and their prices. A clear need for construction still exists, in our view, especially in the larger cities, because of rapid population growth. However, demand has slowed, especially in the more expensive segments. The construction companies' employment plans are still positive and labour shortages are high, although building expectations in a year’s time have slowed.

 


Source: Valueguard, Macrobond



Source: Hemnet, Macrobond











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Helena Bornevall

Senior Economist

Scenario Analysis

hebo12@handelsbanken.se

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