January 24, 2018 / 9:32 AM / 4 months ago

Swedish housing market to stabilize - Nordea, Swedbank outlooks

STOCKHOLM, Jan 24 (Reuters) - Property prices in Sweden will stabilize this year after a dip in the last few months of 2017, with the effect on GDP growth relatively limited, banking group Nordea said on Wednesday in an economic outlook.

In a separate outlook, Swedbank forecast the housing market will stabilize later this year with unchanged prices overall in 2018.

* Housing market trends create uncertainty about growth and inflation, Nordea said

* “We expect housing prices to stabilise after the decline in 2017. Even so, recent housing market trends will have repercussions, most notably in the form of decelerating housing construction,” Nordea said

* Rising interest rates will be a challenge for the Scandinavian housing markets 2019 and beyond, Nordea said

* Sees housing starts falling to 50,000 in 2019 from the 27-year-high of 65,000 last year

* Sees recent years’ 0.7 pct point direct contribution to GDP growth shifting to a drag of almost the same size in 2019

* Increased uncertainty and lack of positive wealth effects will dampen household spending

* Higher incomes and a stronger labour market will on the other hand support household spending, and exports will also support the economy, Nordea predicted

* Swedbank says price decline for tenant-owned flats to bottom out at 10-15 percent from peak in Greater Stockholm and Gothenburg during second half of 2018

* Swedbank sees decline in housing investments, but growth to remain good due to global cyclical upswing and resilient domestic demand

* A housing price decline in excess of 15 percent overall would lower growth and cause recession, Swedbank says.

Reporting by Anna Ringstrom; Editing by Simon Johnson

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