Swedish Housing Prices Show Minor Increase Amid Cooling Trends
Swedish housing prices rose 1% in May 2025, but cooling trends and a decline in GDP raise concerns for future price stability.
Key Points
- • Housing prices rose by 1% in May 2025, but trends indicate a potential decline.
- • Villa prices increased by 1.3%, apartment prices by 0.3%.
- • Projections for annual price growth adjusted from 6% to 3%.
- • Swedish GDP declined by 0.2% in Q1 2025, increasing chances of interest rate cuts.
In May 2025, Swedish housing prices experienced a modest increase, rising by 1 percent according to the latest data from SBAB. This uptick, however, comes amidst an underlying trend indicating a potential decline in prices, signaling a cooling market that differs from expectations. Robert Boije, the chief economist at SBAB, described the current state of the housing market as "kylig" or chilly, suggesting that while there are signs of life, the overall momentum remains weak.
The specifics of the data reveal that villa prices increased by 1.3 percent, while apartment prices saw a more subdued rise of 0.3 percent. Adjusted for seasonal and temporary fluctuations, the nationwide prices actually dropped by 0.2 percent. Notably, Storgöteborg experienced a decline in apartment prices by 1.9 percent, and northern Sweden recorded a 0.5 percent decrease in villa prices. In contrast, Stormalmö was a bright spot where apartment prices rebounded from previous downturns.
Looking ahead, SBAB revised its forecast for the year, reducing the anticipated price increase from an earlier projection of 6 percent down to 3 percent. This adjustment reflects the current market conditions, which Boije indicates do not warrant further revisions to the forecast at this time. Furthermore, the recent report from Statistics Sweden highlighted an unexpected decline in the country's GDP by 0.2 percent in the first quarter of the year, which bolsters the likelihood of interest rate cuts by the Riksbank.
Boije pointed out that the housing market is influenced more by fixed interest rates compared to variable rates, while psychological factors could also play a significant role, particularly if the Riksbank decides to reduce the policy rate multiple times this year. This combination of factors contributes to an uncertain outlook for Swedish housing prices moving forward.