Price expectations this month declined in the areas where households have been more optimistic but increased in the south and south east where price expectations have been at the lowest. Still, expectations in Stockholm remain the highest.
House prices will continue to rise
House prices have increased gradually in 2013 and SEB’s survey implies a continued upward pressure going into 2014. So far, the upturn in prices has been more muted than suggested by the indicator.
“A further decline in the indicator would not make us change our main scenario of another modest price increase (around 5 per cent) in 2014. Going forward, we expect prices to gradually level out in 2015 as the Riksbank starts hiking rates and with lending also restrained by macroprudential measures,” says SEB economist Elisabet Kopelman.
In the middle of November, Sweden’s financial supervisory authority made a proposal to increase the risk weights for mortgage loans to 25 per cent. So far no bank has, however, increased their rates to households for this reason, pending a final decision from the FSA.
Housing starts continued to increase in the third quarter this year which suggests that the upturn in lending growth could become more pronounced in 2014. Meanwhile, the Minutes from the Riksbank’s December meeting showed that while the bank remains concerned over risks from household indebtedness it is now putting increased emphasis on low inflation.