(Bloomberg) -- Swedish home prices halted a slide that’s lasted for almost a year even as one of the world’s worst-hit housing markets still faces a further climb in borrowing costs.

Apartment prices rose 1% in February compared with the average from the prior three-month period, used to smooth out volatility in the data, according to realtor organization Svensk Maklarstatistik on Wednesday. That’s the first increase since March last year. Prices for single family homes were unchanged after declining for the previous eight months. 

The news confirms tentative evidence that the residential property market in the largest Nordic nation is beginning to thaw after about 15% of home values has been wiped out in the country’s most severe housing slump in three decades. 

Still, sales volumes are down and with economists raising their forecasts for the Riksbank’s key interest rate, there may be more room for the decline that’s pegged to reach 20% from the peak by most forecasters, including the central bank.

“It is not unusual for the year to begin with gains, and it remains to be seen if we have come close to a more balanced housing market,” Per-Arne Sandegren, chief analyst at Svensk Maklarstatistik, said in the statement. Sales volumes for flats and detached houses fell by a quarter and by one fifth, respectively, from a year earlier.

The data follows remarks by Riksbank Governor Erik Thedeen downplaying the risks of a housing crash and reiterating the policymakers won’t be deterred from further monetary tightening. Svenska Handelsbanken AB earlier this week boosted its expectations for rates, saying the Swedish central bank is likely to take its key rate to 4.25% from 3% now after core inflation reached a three-decade high.

Read More: Riksbank Governor Says Forgoing Rate Hikes Would Be ‘Risky’

A contraction in fourth-quarter economic output, weaker business sentiment indicators and “very depressed” households led SEB AB on Wednesday to forecast a deeper full-year gross domestic product drop, at 1.5% versus its previous projection of a 1.2% decline. 

“Household confidence has improved a little but is close to the levels from the crisis in the beginning of the 1990s,” SEB economist Olle Holmgren wrote in a note to clients. “There are also new signals about a big drop in construction where, for example, the number of housing starts has almost halved over the past three quarters.”

--With assistance from Joel Rinneby.

(Updates with comments from SEB in seventh, eighth paragraph.)

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