Sweden’s Biggest Bank Sees ‘Red Hot’ Home Prices Cooling in Fall

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The “red hot” housing market in Sweden is likely to slow down after the summer, according to the chief economist at the country’s biggest bank, Svenska Handelsbanken AB.

“Demand will be held back by the increasingly inflated prices and households returning to more normal consumption patterns,” Christina Nyman said in a statement.

Such a development would be welcome news for the country’s central bank, which has repeatedly made clear it’s worried about the housing boom in Sweden, where home prices last month rose 18.9% from a year earlier, the fastest pace on record.

Handelsbanken is forecasting that Swedish property prices will increase by 12% this year and by 5% in 2022.

Even with an expected slowdown, the effects of the pandemic will mean more lasting changes on the country’s property market, according to Nyman.

The prices of houses will increase faster than those of apartments in the coming years owing to a “lack of buildable land in attractive locations.” On the retail side, e-commerce and working-from-home trends will mean “a permanently lower customer base” for retailers in city centers.

©2021 Bloomberg L.P.

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