After a modest rise in May, housing prices retreated in June according to Danske Bank’s Home Price Indicator*. On a seasonally adjusted basis, the indicator fell 1.3 percent from May to June. The number of transactions on the housing market also declined. Summer months are typically calmer for the housing market, but transaction volumes were low even after accounting for seasonal patterns.
Our forecast is that housing prices will hit their low point during the summer.
If the economic recovery gains renewed momentum this autumn, conditions could support a turnaround in housing prices. Household finances and sentiment have improved somewhat and are being supported by the central bank’s interest rate cut and signals of possible further cuts. That said, optimism should be cautious: global uncertainty remains high, unemployment is elevated, and household purchasing power is recovering only from subdued levels. We are still in a downturn, but there are reasons to expect a clearer economic recovery in the second half of the year.
Comment from Susanne Spector, Chief Economist at Danske Bank: “The drop in housing prices underscores how fragile the situation remains. Summer months should always be interpreted with some caution, but there is hope that prices are close to the bottom this time. The central bank cut rates in June, and signals of further support from both fiscal and monetary policy should help push housing prices higher more clearly in the autumn.”
*The Danske Bank Home Price Indicator tracks the price development of condominiums within Stockholm municipality and is updated at the end of each month based on published final sale prices from the property site Hemnet.
The Danske Bank Home Price Indicator is used as an early indicator for housing prices during the current month. Because Sweden’s broader housing market typically follows developments in Stockholm, it serves as a useful gauge of overall housing price trends.