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STOCKHOLM: Swedish house prices fell 5% in the fourth quarter of last year compared with the previous three months, as a drop in real estate prices reduced the cost of living for heavily indebted households, data showed on Thursday. .
Single-family home prices have fallen this year in the face of rising inflation and repeated large rate hikes by the Swedish Central Bank, breaking a decades-long rally in real estate prices that has made home debt the highest in Europe. raised to the highest level.
Inflation is running at a 30-year high and mortgage costs are rising, putting pressure on homes, reducing consumer spending, pushing down residential crimping construction and economic development.
“There are reasons to be concerned on the housing market,” nordia said principal analyst Torbjorn Isaksson.
“Not only have the increases in interest rates been substantial, they were unexpected. This is a huge challenge and unfortunately I think housing prices will fall further.”
Data from the SCB statistics office shows that single-family home prices fell 2% in 2021 compared to the same period.
Nordea expects house prices to fall 20% from record highs in early 2022 and only bottom out in the middle of the year. This projects Swedish GDP contracting 2% in 2023 and Isaksson said the housing market represents a downside risk to the labor market and the wider economy.
Riksbank It kept interest rates at or below zero for nearly eight years before suddenly changing course last year, raising the benchmark rate four times to 2.50%.
The Riksbank has repeatedly warned against what it called a “dysfunctional” housing market. Sweden,
The chronic housing shortage and low interest rates along with liberal tax exemptions on interest payments, looser borrowing rules have seen home prices increase by nearly 400% over the past three decades.
While households widely have ample financial buffers, many have floating-rate mortgages, meaning that any interest rate hike translates into higher costs to service their loans.
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