(Bloomberg) -- Swedish apartment prices reversed a part of their recent gains in July, suggesting the housing market’s road to recovery remains bumpy after a 2022 rout.
Last month’s 1.2% drop, not adjusted for seasonality, was the first monthly decline reported by Svensk Maklarstatistik since July last year. In a month that typically sees low activity and weaker pricing for private homes, prices of detached houses still increased by 0.5%, and the transaction volume was higher than usual, the figures showed.
The data from the organization, which is owned by the Swedish Association of Real Estate Agents, comes amid conflicting evidence about whether the largest Nordic economy has passed its trough. The confidence of borrowers hinges on signals from the country’s central bank about how it intends to proceed with an easing campaign that started with an interest-rate cut in May.
A large proportion of mortgage-holders in Sweden have rates fixed on short terms, which makes them sensitive to changes. That took a toll in 2022 when the Swedish housing market experienced one of the deepest declines in the developed world as borrowing costs increased.
The Riksbank has said it could lower borrowing costs an additional two or three times before the end of the year, while market rates indicate that it will cut four times, taking the benchmark to 2.75%. The central bank’s next monetary policy decision will be announced on Aug. 20.
Despite the decline in apartment prices, the July data from Maklarstatistik was encouraging to some real estate brokers after the market has been affected by a large supply and low turnaround.
“The seasonal slowdown we normally see wasn’t nearly as obvious this year,” Fredrik Kullman, chief executive of Bjurfors Sverige, said in an emailed statement. He said prices may rise “somewhat, as lower rates allow buyers to increase their budgets.”
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