Sweden’s Homebuilding Recovery on Shaky Ground as Activity Slows
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Loading... - Anneliese Volker
- 18 Jul 2024
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The anticipated rebound in Swedish residential construction appears fragile, as a recent surge in activity has waned over the past few months. This slowdown casts doubt on the sustainability of the nascent recovery in the largest Nordic economy.
According to data provider Byggfakta, their housing starts indicator fell by 2% month-on-month in June. Additionally, improvements noted in previous months have been slightly revised downward, dampening optimism that the severe decline in homebuilding, which significantly impacted Sweden's economic output in 2022 and 2023, will see a near-term reversal.
"The situation has improved this year, but the recovery seems to be on shaky ground," said Tor Borg, Byggfakta's head of analysis, in a statement. "It will be interesting to see whether lower interest rates and a stronger economy can provide a boost during the second half of the year."
Sweden's central bank has begun reducing borrowing costs, lowering them from a 15-year high of 4% reached last year. Last month, the bank indicated the possibility of up to three more interest-rate cuts by the end of the year, as inflation is projected to stabilize near its 2% target. These potential cuts would be a welcome relief to homebuilders, who have been grappling with rising construction costs and reduced demand due to previous rate hikes.
