Sweden’s Housing Crisis Deepens – Bloomberg
By RT News
The Nordic country’s property market is among the worst-hit globally, the outlet says.
Swedish home prices continued to slide in March as stubborn inflation and surging borrowing costs extend a housing market crunch in the country.
Residential property prices in the largest Nordic economy declined by 0.8% last month, data from the state-owned mortgage lender SBAB published on Monday showed. The decline had slowed to 0.6% in February, but most experts say housing prices will continue to fall and may even surpass the forecast 20% drop-off.
Housing prices plunged by 15% in nominal terms last year, driven by surging inflation and interest rate hikes by the central bank.
The worst housing-price slump in three decades in Sweden has contributed to a surge in defaults, particularly in the construction industry, which is responsible for 11% of the country’s economic output. In March, bankruptcies in the sector surged 14%, which has suppressed investment in new dwellings.
The chief economist at SBAB, Robert Boije, called the March slide “surprisingly strong” adding that he expects “significantly weaker development going forward if the Riksbank continues to raise the policy rate and inflation continues to remain at high levels.”
Sweden’s housing market is the most vulnerable in the EU due to the country’s rising interest rates. Although about 64% of Swedes own their homes, many have mortgages. However, because in most cases these are not long-term, fixed-rate mortgages, there is a high degree of exposure across the sector to rising interest rates, which are now at their highest levels in more than a decade following a series of hikes by the Riksbank.
Industry experts say housing prices are also strongly affected by unusually high electricity prices and warn that the decline in the Swedish property market may last for years.