May 11, 2020 / 6:48 AM / 22 days ago

More Swedes expect falling house prices in the coming year - SEB

STOCKHOLM, May 11 (Reuters) - More Swedes expect house prices to fall over the coming 12 months, banking group SEB’s sentiment indicator showed on Monday, as the effects of the novel coronavirus and measures to limit its spread grip the economy.

The indicator dipped 6 points to minus 26 in April after a fall of 47 points in March.

“Last month’s fall in the Housing Sentiment Indicator was the biggest we have seen in a single month and this month’s figure strengthens the view that we can expect housing prices to fall,” SEB economist Jens Magnusson said in a statement.

So far, real data has shown a limited impact on the housing market.

But with the economy expected to contract around 7% this year, few expect it to be untouched. SEB reckons prices could fall 5%-15% this year, but analysts do not expect a crash.

The government has launched a raft of measures to head off a surge in unemployment, including partially paying the wages of those on shorter working hours and cutting labour taxes, as well as loans and guarantees to keep companies going through the crisis.

In addition, the financial watchdog has eased rules mandating compulsory mortgage repayments and the central bank has been buying mortgage-backed debt to prevent a rise in banks’ borrowing costs spilling over to households.

Reporting by Simon Johnson; editing by Niklas Pollard

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