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Fast Comment SwedenHousing prices in June

  1. Slow increases in housing prices in June (SA), no surprises in sight
  2. Persistently elevated supply of housing units up for sale
  3. Risks remain, but so far the overall trend has been closely in line with expectations
Slow increases in housing prices in June (SA), no surprises in sight
Housing prices fell by 0.6 percent in June compared to May according to Valueguard’s HOX index. Taking seasonal factors into account, this implies a positive trend for the third month in a row (see graph). Seasonally adjusted housing prices increased by 0.4 percent in monthly terms, following a 0.6 percent increase in May (according to our calculations). All in all, housing prices in June were 5 percent down compared to the peak at the end of last summer. Prices on tenant-owned flats and on houses in Malmö increased the most, while housing prices in middle-sized cities saw the weakest developments (see table). Overall, these figures are not much of a surprise.
Persistently elevated supply of housing units up for sale
The supply of existing homes for sale on the home sales website Hemnet peaked before the implementation of the amortisation requirement in March, but is still higher than the previous year. Digging into the details, the number of tenant-owned apartments for sale on Hemnet is higher than last year for all 21 counties except Norrbotten. The biggest increase, in percentage change, has been in the county of Kronoberg. For houses, Stockholm county stands out with the biggest percentage increase. It seems as if it is a combination of factors at play, contributing to higher supply of existing homes for sale and to dampened demand compared to the previous year. There are reasons to believe that the number of existing housing units for sale will stay elevated in many regions compared to previous years, driven by completions of new units. Although, we expect the number of transactions (housing units sold and bought) to gradually strengthen. Activity is usually weak in July, but the following months will probably comprise of important information on the state of the housing market.
Risks remain, but so far the overall trend has been closely in line with expectations
The overall trend in housing prices this year has been closely in line with expectations and we stick to our view of a step by step stabilisation of housing prices. Even though we forecast a policy rate hike at the Riksbank's December meeting, the interest rate will merely reach 0.25 at the end of 2019, we believe. We will pay close attention to potential risks from abroad, that could weigh on households’ income and demand. Today’s global demand and households’ low risk of unemployment supports our view of stable developments in housing prices ahead.

  


Source: Valueguard and own calculations

  


Source: Valueguard and own calculations

 


Source: Valueguard, Macrobond 


Source: Valueguard, Macrobond

 


Source: Hemnet, Macrobond

Disclaimer

Helena Bornevall

Senior Economist

Scenario Analysis

hebo12@handelsbanken.se

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