Swedish home prices rise above expectations in January
Swedish home prices rose 2.9 percent sequentially in January. On a year-on-year basis, the home prices rose 6.2 percent, showed the HOX/Valueguard home price index. Today’s data is above expectations. Apartment prices in Stockholm also rose sequentially and was up 7 percent year-on-year. Home prices rose 0.5 percent on the month when taken seasonal effects into account.
Home prices growth have gathered momentum in the last months. Households are optimistic about home prices, probably due to falling supply and low long-term rates, noted Nordea Bank in a research report.
The data released today implies that the one-off hike from the Riksbank might not dent home prices, instead households might have taken the Riksbank’s promise of zero rates for the near future to heart. Looking at households’ expectations, home prices might increase even more in the months ahead, posing a clear upside risk to the forecast of home prices growing at par with disposable income.
“Swiftly rising home prices increase risks further out, but support domestic demand and brighten outlook for households in the near term. The Riksbank will be glad of the uptick in domestic demand, but at least some of the board members will also worry about the swift increase in home prices. Both will make them, on the margin, more reluctant to cut rates and go back into negative territory”, added Nordea.