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Swedish home price index rises for fifth consecutive month in September
Sweden’s HOX/Valueguard home price index showed that home prices grew 1.1 percent sequentially and 8.9 percent year-on-year in Sweden. This is the fifth consecutive month that the prices have gained. Home prices had bottomed out in April and had reached a new all-time high in September. Taking seasonal effects into account, home prices rose 1.2 percent on the month.
The rise in home prices is widespread. Over the year, house prices rose 11.4 percent, whereas prices for apartment were up 5 percent. Apartment prices in Stockholm rose the most in September by a full 3.5 percent sequentially. House prices rose 13 percent over the year in Stockholm, whereas apartment prices rose 5.2 percent.
The number of transactions were also at all-time high levels in September, suggesting a strong rebound on the housing market. Preliminary figures for the first half of October indicate that home prices continue to rise.
Households are positive regarding home prices, suggesting a more rapid rise in home prices in months ahead. Taking household expectations at face value, they suggest a growth in home prices above 10 percent at the turn of the year. Today’s reading suggests a clear upside risk to the forecast that home prices will rise 6 percent in 2020, noted Nordea Bank in a research report.
Rising home prices underpin the recovery in the domestic economy and affirms that several households have an overall good economic situation. The Riksbank might probably revise their view of the upturn in home prices “as fragile and temporary”.
Most home owners have been unaffected by job losses. Moreover, low rates provide further support to home prices. The pandemic also appears to have made households more inclined to spend money and time on their homes.
“Further out, risks related to household indebtedness rise, which should worry the Riksbank. Any additional measures to “kick-start” household demand is not necessary, and the Riksbank’s buying of covered bonds should be questioned”, added Nordea Bank.