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Fast Comment SwedenPreview: Housing prices in February

  1. We expect the stable trend to continue, despite the weak January figure
  2. Regional differences, mainly on the new construction market
  3. Repo rate hike possible in September
We expect the stable trend to continue, despite the weak January figure
Next Monday, HOX housing prices for February will be released. January was a slight disappointment, considering the exceptionally weak monthly figure. However, we continue to expect an overall stable trend over the upcoming months. Figures from Svensk Mäklarstatistik showed that housing prices in February were close to unchanged compared to the three previous months. However, the figures indicate a small decrease in the seasonally adjusted monthly change. Will this also be the case for the quality-adjusted HOX index? Stay tuned. It's worth mentioning that the seasonal adjustment has proved to be uncertain; partly due to the short time series.
Regional differences, mainly on the new construction market
In some aspects, there are important regional differences. To some degree, that holds for the housing price trend for existing homes. However, in most counties the prices of existing homes are close to those seen 12 months ago (see graph below), indicating the slower trend is broad-based. The share of apartments in existing homes that are sold below the asking price is around 10 percent in most of Sweden’s 21 counties, according to Booli. Only Gotland and Kronoberg counties stand out, in different directions (close to 3 percent vs. just over 15 percent). The regional differences are most obvious in the new construction market. Almost half of the newly produced homes for sale are located in Stockholm and Uppsala county, where the prices of newly built homes have been reduced relatively significantly.
Repo rate hike possible in September
We forecast a repo rate hike in September. However, as we wrote in the CPI comment yesterday, underlying inflation remains muted and we see a diminishing probability of a hike this autumn. Regardless, we believe one rate hike would have limited effects on household economies, not least because homeowners expect higher future interest rates. We stick to our forecast of a strong labour market in 2019, and stable housing prices. That being said, we will continue to monitor the new construction market closely, as well as these firms’ employment plans.

Please see charts and comments below.


Stable housing price trend in 2018 expected to continue, as we believe the strong economy will counterbalance the effect from the high number of homes for sale.    


Sources: Valueguard, Macrobond


Apartment prices have slowed in all 21 counties.


Sources: Valueguard, Macrobond


According to Svensk Mäklarstatistik, the number of homes for sale still on a decent level.


Sources: Svensk Mäklarstatistik, Macrobond


The number of apartments for sale remains elevated.


Source: Hemnet, Macrobond


Disclaimer

Helena Bornevall

Senior Economist

Scenario Analysis

hebo12@handelsbanken.se

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