09 Dec 2013 09:00

Swedish house prices seen stable at high level

Price expectations this month increased in the northern regions but declined in the south, where price expectations also are at the lowest. Expectations in Stockholm continued to be the highest, although they declined marginally in December.

House prices have increased gradually in 2013 and our survey implies that the upward pressure may increase going into 2014. So far, however, the upturn in prices has been more muted than suggested by the indicator.

In the middle of November, Finansinspektionen (Sweden’s Financial Services Authority) made a proposal to increase the risk weights for mortgage loans to 25 per cent, which could exert upward pressure on mortgage rates and help to dampen prices and lending growth.

So far no bank has, however, increased the rates to households stating that they will await the implementation before deciding on how large share of the increased funding costs will be passed on to households.

Household lending growth edged higher to 4.9 per cent in October, partly due a weak comparison month in 2012. Housing starts continued to increase in the third quarter this year and have increased by 33 per cent so far in 2013 compared to the same period in 2012.

This suggests that the upturn in lending growth will become more pronounced going into 2014, say SEB’s economists.