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Fast Comment SwedenHousing prices in December: Somewhat higher than expected

  1. The seasonally adjusted monthly figure continues to be positive
  2. Weaker development in Gothenburg in December
  3. Higher incomes to counterbalance the effect from higher rates and supply
The seasonally adjusted monthly figure continues to be positive
The year of 2018 ended on a slightly positive note. The monthly figure for December was somewhat higher than we expected and our summary of the year is "stabilisation". In December, housing prices according to the HOX index decreased by 0.8 percent compared to November, meaning a small rise in the seasonally adjusted monthly figure (0.3 percent according to our calculations). This means that prices are less than 4 percent below the peak in prices in August 2017 and that the annual percentage change rose to 2 percent.
Weaker development in Gothenburg in December
Regionally, housing prices in Malmö have outperformed those in Stockholm and Gothenburg over 2018 (see y-o-y figure in the table below). Lately though, housing prices in the biggest cities have been trending fairly similarly. The same goes for houses and tenant-owned apartments. That being said, in December the trend in housing prices in Gothenburg followed a weaker trend.
Higher incomes to counterbalance the effect from higher rates and supply
We continue to expect stable prices in 2019. Hence, we believe the effects from somewhat higher interest rates and from the new construction that continues to add supply to the market will be counterbalanced by rising incomes and employment. Over the past months, households have, according to several surveys, revised down their view of housing prices in the near term. Still, housing prices have continued to show a stable trend. Also, the number of transactions have remained at a fairly high level. As we have written earlier, the high number of projects up for completion in 2019 could pose risks to prices and bring further pain to smaller developers. However, we haven’t seen anything but a stable market for existing homes recently.

Please see table and graphs below.


Stable trend in overall housing prices, despite a small decrease in Gothenburg (SA).


Sources: Valueguard and Handelsbanken



Housing prices now 2 percent above the levels in December 2017.


Sources: Valueguard, Handelsbanken and Macrobond


House prices in Malmö have outperformed those in Stockholm and Gothenburg in 2018.


Sources: Valueguard, Handelsbanken and Macrobond


More similar developments for tenant-owned apartments.


Sources: Valueguard, Handelsbanken and Macrobond


Disclaimer

Helena Bornevall

Senior Economist

Scenario Analysis

hebo12@handelsbanken.se

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