Sweden's Housing Market Headed for ‘Soft Landing,' Minister SaysBy
Sweden’s finance minister says the biggest Nordic economy is strong enough to avoid an all-out rout in the nation’s housing market.
The recent decline in prices is “sensible” after years of a housing boom, Magdalena Andersson said in an interview after a press conference in Stockholm.
“Much points to a soft landing,” she said. The economy is “doing well,” there’s real income growth, low rates and “large demand” for housing in Sweden, she said.
Swedish officials have been trying to talk down speculation that the property market is headed for a correction. Currency investors started selling kronor this month as a string of weak housing data underpinned their concerns.
One report showed that housing prices fell 3 percent in October, the steepest decline since the global financial crisis of 2008, and a survey this week suggested that a majority of Swedes expect further declines.
Andersson said the recent property boom, with prices up almost 40 percent over the past three years, was “clearly not sustainable.” But she also warned that a sudden reversal in prices “will have consequences for the economy.”
More clues are due on Thursday, when Svensk Maklarstatistik AB and Valueguard both publish housing price data for November. Nordea Bank AB expects a “November Noir,” with home prices declining 3 percent on a monthly basis and 1 percent on the year. Property-listings website Booli, owned by mortgage lender SBAB, said on Dec. 7 that the average selling price for Swedish apartments last month fell 3 percent from the same period a year earlier, led by a 7 percent drop in Stockholm.
The adjustment follows years of overheating caused by a shortage of housing and record low borrowing costs. But supply has started to outstrip demand, thanks to a sudden increase in construction. Figures from Booli show that the number of Swedish apartments for sale was 57 percent higher in November than a year earlier.
The finance minister on Tuesday defended a plan to tighten mortgage rules next year for people with the biggest mortgages.
“If you have taken large loans relative to your income and your salary, then there is a great reason to reduce that debt as soon as possible,” she said. The tighter rules probably won’t hurt young people and new immigrants, she said.
Riksbank Governor Stefan Ingves, who has been particularly sanguine in his warnings over surging property prices, has also argued that the slowdown is “not a big concern.”