12 May 2014 10:30

Swedish House Price Indicator at new post crisis high

About 66 per cent of households expect home prices to rise in the coming year. Only 6 per cent expect them to decline, which is the lowest since the start of the survey in 2003. About 19 per cent see unchanged prices.

Recent low inflation and signals that the Riksbank is moving towards another rate cut are likely to have contributed to increased optimism. Households have lowered their repo rate expectations somewhat further to 0.82 per cent in 1 years' time from 0.89 per cent in April. Meanwhile, the share of households planning to fix rates declined somewhat further to 3 per cent. 

Increased demand for new loans

Increased activity on the housing market has not been fully reflected in lending data which has been surprisingly stable. SEB’s survey suggest that this may be about to change. During the past year SEB has surveyed households on their lending behaviour, asking whether households have taken on new house loans during the past three months or intend to do so in the coming three months. In May 6 per cent of households planned to take on new debt in the coming months, which is the highest since the start of the series in May last year. The short history of the series is a source of uncertainty, however. 

Last week, the Riksbank presented a study on household indebtedness based on new data which showed that the debt ratio among households with mortgages is over 300 per cent on average and higher among low and middle income earners. To some extent, this contradicts earlier conclusions that debt is concentrated to wealthy households with higher incomes.

Riksbank monetary policy has since last fall focused more on low inflation and less on household debt, with the main the responsibility for household debt falling on the Financial Supervisory Authority (FI). SEB’s experts do not expect a change in this situation despite the more worrying conclusions from the Riksbank study. Instead, signs that lending is picking up is likely to be met with increased pressure from the Riksbank on the FI to introduce new measures.