In recent months, condominium prices have increased by five percent, and house prices are also rising.
Your condominium will increase in value…
Jens Magnusson is chief economist at SEB and believes that prices will rise, which he says in a new interview with The business world.
– During the rest of the year, we can see a further increase of a couple, 3%, and then an increase rate of around four to five percent annually when the housing market receives continued support from slightly lower interest rates and rising real wages. This means that in 3 years housing prices may be around 10-15% higher than today and in 5 years around 15 to 25 percent higher than today, says Jens Magnusson in the interview.
It is a very high rate of price increase, which indicates good years for those who already own their home, which is about half of Sweden’s population.
… But it will also be more expensive for you to buy new
The other half of Sweden, who do not yet own their home, may not agree.
Rising prices mean that it may become even more difficult for young Swedish people to borrow for the cash investment needed to buy their first home.
This is especially true because interest rates are still high and most experts do not believe that the Riksbank will return to a 0 percent policy rate in the foreseeable future.
Hope is alive and well
But hopes are high that inflation will continue downward and that the Riksbank will cost itself a couple more interest rate cuts in 2024 and 2025.
But there is one concern, and that is whether the Swedes become more cautious in the housing market – or whether the economy stagnates in a deeper slump than previously thought.
Nordea: It can stop the interest rate cuts
Also Nordea’s analyst Gustav Helgersson believe that prices will increase significantly. Possibly as much as five to ten percent until the end of next year, he tells Affärsvärlden.
But there are risks even with that. If the US Fed refrains from lowering the interest rate significantly, the Riksbank in Sweden will not dare to deviate too much from the Fed’s policy rate levels.
– A risk of a setback in the housing market is if the Riksbank eases the monetary policy brake more slowly than households expect. The American central bank Fed looks to wait until the end of the year before lowering the policy rate, says Helgesson to Affärsvärlden.
Could damage the Swedish housing market
If, against the odds, the interest rate is lowered much more than the Fed and Europe’s central bank ECB in Frankfurt, it could cost in the form of a further weakened Swedish krona in international contexts, he tells the newspaper.
The Swedish housing market would be damaged in such a way that a failure to cut interest rates would lead to a long-term rise in prices and fewer housing transactions, as the buyers are in theory waiting for cheaper loans and the sellers are waiting for higher prices.
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