Sweden Braces Itself for Property Market's `November Noir'

(Bloomberg) -- Anyone with a stake in Sweden’s property market should make space for Thursday in their calendar. That’s when they’ll get fresh clues as to whether they are facing a temporary blip or the start of a full-blown crash.

Svensk Maklarstatistik AB and Valueguard will both publish housing price data for November on December 14. There are indications that the monthly drop will be as big -- if not bigger -- than October’s, when prices fell 3 percent, the steepest decline since the global financial crisis of 2008.

Nordea Bank AB expects a “November Noir,” with home prices declining 3 percent on a monthly basis and 1 percent on an annual basis. Property-listings website Booli, which is owned by mortgage lender SBAB, said on December 7 that the average selling price for Swedish apartments last month fell 3 percent from the same period a year earlier, led by a 7 percent drop in Stockholm.

Sweden Braces Itself for Property Market's `November Noir'

While few analysts believe Sweden is headed for a repeat of the real-estate crash of the early 1990s that brought the economy and the banks to their knees, households are getting increasingly jittery about the outlook of a market that ties up large chunks of their wealth.

“I think prices have to come down, but I’m also a bit worried that we’ll have a similar crash as we had in the early 1990s, where the effects were substantial,” Ann-Helen Meyer von Bremen, a journalist, said in an interview at Stockholm’s central station.

Sweden Braces Itself for Property Market's `November Noir'

The turn in the market comes after years of rapid price gains caused by a shortage of housing and record cheap mortgages. A recent surge in construction has now caused supply to outstrip demand. Figures from Booli show that the number of Swedish apartments for sale was 57 percent higher in November than in the same month last year.

Sweden Braces Itself for Property Market's `November Noir'

Anders Lillehagen, 26, is experiencing first-hand the changing fortunes of Sweden’s housing market. The public-sector worker and his partner bought an apartment in Stockholm in 2015 and saw its valuation steadily climb, only to have seen that increase suddenly be erased.

“We’ve been thinking about moving this spring and we’ve had brokers over at our place, but it’s all been very uncertain,” Lillehagen said in an interview in Stockholm. “They say that if we want to move in February or March we could maybe get about the same price as what we bought the flat for.”

Psychological factors are also at play in determining future home prices. SEB AB’s housing-price indicator, which measures the difference between those who believe prices will rise and those who expect them to drop, fell to minus 5 in December. That means that, for the first time since February 2012, a majority of Swedes expect prices to fall next year.

Sweden Braces Itself for Property Market's `November Noir'

All told, there may still be a glimmer of hope.

“Looking only at developments over the past two weeks, prices have remained largely stable, both in the country as a whole and in Stockholm,” Nordea’s Andreas Wallstrom said on December 5. “This could be a tentative signal that we are close to the bottom and that our forecast of largely stable prices ahead is on track.”

Riksbank Governor Stefan Ingves, who has been particularly sanguine in his warnings over surging property prices, has argued that the slowdown is “not a big concern.”

©2017 Bloomberg L.P.