Swedbank Sees Swedish Home Prices Dropping 15% as Growth Stalls
Economists at Swedbank AB expect housing prices in Sweden to drop by 15% from this year’s peak amid rising living costs and inflation that all but stalls economic expansion.
Swedbank now expects the Swedish economy to expand by 0.4% next year, down from an April projection of 2.3%, as the fastest price increases in three decades “put a wet blanket on the Swedish economy,” the lender said in an economic outlook report on Wednesday.
High inflation and rising mortgage rates are piling pressure on the housing market, which has already seen prices drop from a peak earlier this year, according to the economists. The bank sees the decline continuing into the first half of next year, before home prices stabilize as uncertainty about rising mortgage rates subsides and inflation slows.
Sweden’s third-largest bank by market value also warned that an uncertain political situation following next month’s election risks stalling important economic reforms.
“There is a real risk of another term of office with a difficult parliamentary situation,” according to the report. “Our assessment is that it would not have a significant impact on economic development during the forecast period, but it would have significant effects on growth potential in the future if important reforms and cross-bloc agreements are lacking during another term.” Read More…
