(Bloomberg) -- Swedes’ expectations on housing prices fell for a second consecutive month, as the projected pace of central-bank rate cuts may not be enough to prompt an ongoing recovery to accelerate.
A housing-price indicator from SEB AB fell by 8 points from the previous month, to 43. More than half of the respondents still expect price gains in the Swedish housing market, which was among the worst hit in the world as inflation and borrowing costs increased in 2022. Home prices are currently some 10% below their April 2022 peak, following a modest recovery that started in early 2023.
“After a long period of growing optimism there is now a clear correction in expectations, which tends to happen as prices increase,” SEB’s private economist Americo Fernandez in a statement. “However, more rate cuts in the near future speak in favor of a housing market revitalization this fall.”
Sweden’s Riksbank has said it may lower its benchmark rate by a quarter-point as many as three times before year-end, and the central bank is widely expected to make its next move later this month. Recent data on inflation and growth has increased expectations that officials will ease policy faster than they have outlined, which would provide relief to homeowners whose mortgages typically have interest rates fixed for no more than three months.
Still, households in SEB’s survey on average expected less than two cuts in the next 12 months, and Fernandez said there is reason to believe that “households will be pleasantly surprised” by a higher pace of easing during the remainder of this year.
--With assistance from Joel Rinneby.
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