Danske Bank's House Price Indicator: Fragile situation in the housing market

After a slight rise in May, housing prices fell back in June, according to Danske Bank Housing Price Indicator*. In seasonally adjusted terms, the Housing Price Indicator fell by 1.3 percent from May to June. The number of transactions in the housing market also decreased. The summer months are usually quieter in the housing market, but the number of completed transactions was low even when taking the summer season into account.

According to our forecast, housing prices will bottom out during the summer.

When the economic recovery finds new strength this autumn, there are conditions for housing prices to also turn up. The situation and mood of households have improved somewhat and are supported by the Riksbank's interest rate cut and signals of possible further cuts. However, optimism should not be exaggerated; there is still great uncertainty in the world, unemployment is high and households' purchasing power is improving from subdued levels. We are in a recession, but there are still reasons to believe that the economic recovery will improve more clearly during the second half of this year.

Comment from Susanne Spector, Chief Economist Danske Bank: “The decline in house prices underlines that the situation is fragile. Summer months should always be interpreted with some caution, but there is hope that house prices are close to the bottom for this the time. The Riksbank lowered the interest rate in June and there are signals of further support from both financial– and monetary policy should mean that housing prices turn up more clearly this autumn.

*Danske Bank The housing price indicator refers to the price trend for tenant-owned apartments within the Municipality of Stockholm and is updated at the end of each month based on published final prices from the housing website Hemnet.

Danske Bank Housing price indicator is used as an early indicator of housing prices during the current month. Since the development of housing prices in Sweden largely follows the development in Stockholm, it is a useful indicator of housing price developments as a whole.