Swedish housing starts falls in Q3 2018, likely to decline further in quarters ahead

Swedish housing starts dropped noticeably in the third quarter. It is likely to fall further in the quarters ahead, noted Nordea Bank in a research report. According to Statistics Sweden’s preliminary figures indicate that the number of housing starts was 10,600 in the third quarter, thus 2,300 or 18 percent down year-on-year. Second quarter’s data was slightly revised down. Housing starts fell markedly in Stockholm.

On a seasonal adjustment basis, the number of housing starts came in at 12,500 in the third quarter, suggesting an annual rate of 50,000. The third quarter’s outcome was slightly below expectations and considerably below the central bank’s forecast. Furthermore, on the back of the fragile situation on the housing market, the housing starts are expected to decline further.

Lower housing investment implies that a previous growth driver would be reversed as from now. It would be a drag on the third quarter economic growth, but the impact would be more pronounced later on. Economic growth is not the main point for the central bank.

“But falling housing construction is still bad news for the bank, supporting our view that the expected rate hike next month will be a one-off event”, added Nordea Bank.