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Swedish Housing Market Rout Continues With Prices Now Down 17%

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(Bloomberg) — The drop for home prices in Sweden continued unabated in the last month of the year, suggesting that 2023 could offer little relief for an already troubled housing market. 

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The overall market is now down almost 17% since a peak in the spring, according to state-owned mortgage lender SBAB, indicating that the 20% forecasts made by most economists — including the central bank — could prove too conservative. 

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The Nordic country is far from alone in suffering from falling property values. After booming during the pandemic, central bank interest-rate hikes have triggered a real-estate downturn in a number of nations globally, including in Canada, Australia and New Zealand. 

The new data sum up a bad year for Swedish home owners and real-estate firms, who are having to adjust to seeing the value of their properties fall in the wake of the surging cost of living and borrowing, and a gloomy economic outlook.  

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In December, home prices fell 2% from the previous month, adjusted for seasonal variations, SBAB said on Monday, citing an indicator based on transaction data from its real-estate listing site Booli. That follows a 2.2% decline in November and 2.3% in October.

“If unemployment were to increase significantly in the wake of the approaching recession, it’s important that mortgage rates do not continue to rise,” Chief Economist Robert Boije said in the statement, warning that this could lead to a “very difficult” situation for the housing market, which could also hit the production of new homes.

Read More: Sweden’s Housing Market Seeks Bottom as Price Drop Continues

Prices for detached houses are now down 19% from the peak in the spring of 2022, while apartment prices have fallen 14%. The larger drop for house prices than apartments is in part explained by high electricity prices, which make it more costly to heat single-family homes.



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