![]() ![]() ![]() ![]() "Our present forecast is that housing prices will continue to fall over the coming months and stabilize only when mortgage rates have peaked during the spring," Christina Nyman, head of economic research and chief economist and Helena Bornevall, senior economist, at Handelsbanken, said in emailed comments to CNBC. Handelsbanken also anticipates a dip in prices. They've increased from 0% to 2.5% and we expect them to continue to increase the policy rates to 3% in February," Helgesson from Nordea told CNBC. "This is as a direct consequence of the Riksbank's increased interest rate. Nordea Bank estimates a 20% drop in home prices from peak to trough. Thomas Veraguth, head of global real estate strategy for UBS Wealth Management, described the correction as "a natural adjustment that is mainly explained by macroeconomic factors." 20% drop in 2023?Ī further policy rate increase is anticipated for February, with the benchmark widely speculated to hit 3%, leading economists to predict a further downturn in property prices. Helgesson characterized the change as a correction, rather than a bursting bubble, "but it is a painful and very fast correction," he added. and I think that Swedish households … have been struggling to adjust to this cycle and foresee these very quick and dramatic rate hikes from the Riksbank," Helgesson said.Įmil Brodin, an economist from the National Institute of Economic Research, said the extent of the rises were "a bit more than people expected" and that it had "gone more quickly than people thought." On average, house prices were up as much as 30% compared to the pre-pandemic level of January 2020, according to Nordea Bank, as the Riksbank started purchasing mortgage bonds, trying to bring rates down and adding fire to an already hot housing market. Demand for property skyrocketed as working from home and a preference for domestic vacations prompted people to upsize their spaces. The pandemic effectĭuring the Covid-19 pandemic, house prices across Europe continued to rise, and Sweden was no exception. "What you see happening now is almost exactly what you would expect to see happening, and that is that households have to pay more and the interest rate sensitivity … is much higher," Ingves added, which makes interest rate payments higher for a huge number of Swedish households. "I've persistently time and time again said that the debt level in the household sector is just way, way too high and there will be a day of reckoning and eventually rates will go up, and now rates have gone up," Ingves told CNBC's "Squawk Box Europe" in an exclusive interview Tuesday. And this downturn is not surprising given the "dysfunctional" nature of the market, according to Stefan Ingves, who headed Sweden's Riksbank from 2006 to 2022. Personal Loans for 670 Credit Score or Lowerīut now property prices are tumbling. Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit ![]()
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