The wave of interest rate hikes from the Swedish Central Bank's side lay like a wet blanket over the entire housing market, says Robert Boije, chief economist at SBAB.
But in recent months, activity on the housing market has increased and is expected to continue during the autumn, especially if the Swedish Central Bank delivers a new interest rate cut next week.
It's the key to getting some momentum on the housing market.
Purchasing Power Returns
On Tuesday, the Swedish Central Bank is expected to cut interest rates by 0.25 percentage points. But it's not just a cut that's needed to get the housing market going again. The Swedish Central Bank has previously stated that it believes in two to three cuts before the end of the year. If they open up for even more cuts in connection with next week's announcement, it could provide further reassurance.
It could be a signal value for those who are going to enter the housing market, that it's breathing a little optimism, says Robert Boije.
The Swedish Central Bank's cut in the repo rate in May, the first in over eight years, has had an impact on the housing market, and further cuts should give a clear "wallet effect" with thousands of kronor less in interest costs going forward for someone who, for example, has a three-million-kronor loan with a variable interest rate, believes Américo Fernández, private economist at SEB.
It means that purchasing power, which has been so drained in recent years, is now actually plus, even if it may not feel that way since things have become permanently more expensive.
Real Crisis
He sees rising housing prices ahead, but the real boost may have to wait a bit. Among other things, due to the large supply of homes on the market that first needs to be absorbed.
And with the greatest likelihood, we will also get a more expansive fiscal policy, including tax cuts. But that will be from next year onwards. It will lead to people having more money in their pockets, the economy starting to grow, and it's usually compatible with rising housing prices, says Américo Fernández.
Both see a bright outlook for the housing market ahead. However, there is still a real crisis in housing construction, notes Robert Boije.
It's really the problem child for the housing market. It's very difficult to get a profitable calculation when it comes to building new homes today.
