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Fast Comment SwedenPreview: Housing prices in October

  1. Stable trend and high activity, according to Svensk Mäklarstatistik
  2. But the monthly HOX figure will be negative and the y-o-y figure will rise, in our view
  3. New Global Macro Forecast released earlier this week
Stable trend and high activity, according to Svensk Mäklarstatistik
The HOX index figure for October is due to be released next Thursday. The HOX index is a quality-adjusted index based on data from the already-released figures from Svensk Mäklarstatistik. Data from Svensk Mäklarstatistik showed a stable price trend for houses and tenant-owned apartments (the monthly figures show the October figure compared to the three previous months). Hence, no big surprise. Also, activity was high in October, according to Svensk Mäklarstatistik, and the number of sales for September was revised upward somewhat, which we view as another comforting sign. We wrote in a previous Fast Comment in September that the number of apartments sold in September was a little disappointing, as it did not rise compared to August. Now, however, it looks better.
But the monthly HOX figure will be negative and the y-o-y figure will rise, in our view
Housing prices usually decrease toward the end of the year, in monthly terms. Hence, a stable trend in prices (i.e. seasonally adjusted, unchanged) means a decline in actual monthly figures of close to 1.5% in October (our calculation). But the annual percentage change (y-o-y) will rise ahead, as prices started to fall over a year ago. Assuming a stable (seasonally-adjusted) trend for the rest of the year implies a y-o-y figure close to zero at the end of the year.
New Global Macro Forecast released earlier this week
Earlier this week, we released our latest Global Macro Forecast report, ‘Interest rate hikes despite lower growth’, providing our updated view on the overall global economy, including Swedish growth, interest rates and the housing market. In short, we believe that GDP growth in Sweden will slow next year, but the boom will continue and employment and wages will continue to increase. That will stimulate housing prices. While housing construction has started a negative trend, the completion of housing projects is still sustaining growth and will continue to have a dampening effect on housing prices. We believe that the Riksbank will soon start to raise the repo rate and that it will be 1 p.p. higher at the end of 2020 (at 0.5 percent). We believe households can cope with such a higher housing cost. Moreover, it should not come as a surprise to households: according to the NIER survey, the increase is closely in line with households' expectations.

Please see graphs and comments below.

Housing prices started to fall in September 2017 and are close to unchanged so far this year, seasonally adjusted. The HOX index does not include prices for new construction.

Source: Valueguard, Macrobond

The annual percentage change (y-o-y) will rise in coming months as autumn 2017 figures fall out of the 12-month window.

Source: Valueguard, Macrobond

The number of sales of tenant-owned apartments is somewhat lower than the record set in 2017, but activity remains high. Note that the sales figures include new construction.

Source: Svensk Mäklarstatistik, Macrobond


Helena Bornevall

Senior Economist

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