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So much can housing prices rise

Coming interest rate cuts can make housing prices rise by up to ten percent by next summer, believes housing researcher Han-Suck Song at KTH. The real estate industry also believes in a clear increase, but not until next year.

» Updated: 26 August 2024, 12:31

» Published: 24 August 2024

So much can housing prices rise
Photo: Tomas Oneborg/SvD/TT

On Tuesday, the news came that the Swedish Central Bank is lowering the interest rate for the second time this year, and that they are opening up for three more rate cuts already during 2024. Analysts believe in further cuts during the spring.

This will have an effect on the housing market, experts believe. Among other things, activity will increase further.

We will see an increased interest and gradually more housing deals during the autumn, says Erik Wikander, vice CEO of Svensk Fastighetsförmedling.

Johan Engström, CEO of Fastighetsbyrån, believes the same thing.

We will see an autumn with relatively high activity on the housing market, he says.

"Prices will go up this year"

The supply of homes is still record-large, but it is expected to change at the beginning of next year, according to Johan Engström. This will lead to shorter sales times, he believes.

I think the increased activity during the autumn will lead to a more normal supply.

The Swedish Central Bank's message will also have a positive effect on housing prices, says Han-Suck Song, lecturer and associate professor in building and real estate economics at the Royal Institute of Technology, KTH.

Given that we do not enter a severe recession, I believe that prices will go up already this year, he says.

Han-Suck Song believes in a price increase of ten percent until next summer. And he believes that the Swedish Central Bank's message on Tuesday strengthened the picture of impending price increases.

There is absolutely a possibility that we can see many rate cuts during the coming year.

In combination with a persistent low inflation rate, it will with great likelihood lead to price increases.

Larger price increase 2025

Han-Suck Song believes that prices will go up a few percent this year, and around 7-8 percent next year – a total of ten percent until next summer.

Johan Engström, from Fastighetsbyrån, is on the same track. He believes in a price increase of 5-8 percent next year. But according to him, one should not expect any price increases this year – due to the record-large supply.

When there is high activity with a large supply, I believe that there will still be some pressure on prices.

Erik Wikander at Svensk Fastighetsförmedling believes in a certain price increase this year, and that housing prices will increase by 5-7 percent next year.

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By TTThis article has been altered and translated by Sweden Herald

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