(Bloomberg) -- Home prices in Sweden have largely stagnated since the start of the year, indicating that the worst-case-scenario of a housing price crash has been avoided, according to state-owned lender SBAB. 

House prices rose 1.2% in February, yet were little changed when adjusting for seasonal effects, showed statistics from the bank’s property listings site Booli published Sunday. The data suggests a stabilization following a price decline in late 2023, and comes as optimism about the market has been buoyed by expectations that the Swedish central bank will soon begin to lower borrowing costs. 

“Unless anything dramatic happens, such as a large increase of joblessness, these numbers suggest that the total drop in housing prices, from spring 2022 to the trough in December last year, ended up at around 15%,” SBAB’s chief economist, Robert Boije, said in a statement. 

High inflation and a tightening campaign launched almost two years ago by the Riksbank has weighed heavily on the Swedish housing market and caused a near standstill in housing construction. Still, the data from SBAB shows that home prices remain about 10% higher than at the onset of the Covid-19 pandemic, which sparked outsized gains in the value of houses and apartments.   

SBAB’s Boije said that while there may be a pent-up demand for housing after a long period of low transaction volumes, a larger-than-usual supply of homes for sale and fewer bidders than normal could limit any market recovery.

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