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SEB Housing Price Indicator stable at elevated levels

HOUSEHOLDS REMAIN OPTIMISTIC ON SWEDISH HOUSE PRICES. The SEB Housing Price Indicator was stable at 45 in May after a string of four monthly increases. The share of respondents expecting rising prices marginally declined to 58% (cf. 59%), while the share expecting falling prices also decreased to 13% (cf. 14%), with 24% expecting unchanged prices (cf. 23%). According to the survey, households repo rate expectations were slightly lower at 1.2% in one years time (cf. 1.3%). Contrary to the beginning of the year, sentiment is now positive in all regions. Sentiment in the South continued to rise strongly in May, although still lagging most other regions. SLIGHT RIKSBANK RELIEF. Improved housing market sentiment has been reflected in signs of slightly increasing housing prices in recent months, while the downward trend in household lending growth has been halted. As such, the high level of the housing price indicator in May signals continued concern for the Riksbank, given its present policy dilemma between on the one hand concerns over high household indebtedness and on the other, too low inflation and risks for renewed SEK appreciation from monetary policy easing abroad. Still, the Riksbank should find some comfort in that the upward trend seems to have halted.

MONDAY 13 MAY, 2013

Going forward, improved risk appetite and rising equity markets suggest that sentiment on the housing market should remain firm.

However, signs of renewed rapid increases in housing prices and/or acceleration in credit growth are likely to be met with additional measures to halt lending. Before summer, a formal decision by the FSA to raise the risk weights for mortgage loans to a 15% floor is expected. Furthermore, both finance minister Borg and Riksbank governor Ingves have called for a further increase if needed. Also, banks are likely to remain under pressure to encourage more households to amortise. Elisabet Kopelman +46 8 506 230 17

Since March 2003 weve contracted Demoskop to survey the Swedish housing market every month. This survey was conducted 29 April7 May, 2013.

SEB's Housing Price Indicator

80 60 40 20 0 -20 -40 -60 -80
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: SEB, Demoskop


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