STOCKHOLM: The drop in home prices in Sweden continued unabated in the last month of the year, suggesting 2023 could offer little relief for an already troubled housing market.
The overall market is now down almost 17% since a peak in the spring, according to state-owned mortgage lender SBAB, indicating that the 20% forecasts made by most economists, including the central bank, could prove too conservative.
The Nordic country is not alone in suffering from falling property values. After booming during the pandemic, central bank interest rate hikes have triggered a real estate downturn in a number of nations globally, including in Canada, Australia and New Zealand.
The new data sum up a bad year for Swedish homeowners and real estate firms, who are having to adjust to seeing the value of their properties fall in the wake of the surging cost of living and borrowing and a gloomy economic outlook.
In December, home prices fell 2% from the previous month, adjusted for seasonal variations, SBAB said yesterday, citing an indicator based on transaction data from its real estate listing site Booli. That follows a 2.2% decline in November and 2.3% in October.
“If unemployment were to increase significantly in the wake of the approaching recession, it’s important that mortgage rates do not continue to rise,” chief economist Robert Boije said in the statement.
He warned that this could lead to a “very difficult” situation for the housing market, which could also hit the production of new homes.
Prices for detached houses are now down 19% from their peak in the spring of 2022, while apartment prices have fallen 14%. — Bloomberg