Swedish housing market keeps cheering the Riksbank

October 28, 2015

Sweden’s Riksbank left its negative interest rate steady at -0.35 percent on Wednesday and increased its bond purchase programme by another 65 billion crowns (just under 7 billion euros). It also said it could cut rates again if needed.

The crown, which the central bank would like to keep weak against the euro, slipped to a two-month low, a modest move. But there’s one market that is certain to relish these latest steps even more: housing. 

Sweden’s housing market has been on fire for years, now 44 percent above its 2007 peak before the financial crisis. Household debt has soared as well. Growth in lending to households is running at a 7.3 percent annual rate, compared with just 1.1 percent in the euro zone.

Sweden house prices vs other European markets

 

What hasn’t been responding so much to the Riksbank’s extremely aggressive monetary policy is inflation.

Sweden riksbank rate, inflation and the krona

 

Riksbank Governor Stefan Ingves said on Wednesday the upturn in inflation can be volatile, jumping around from month to month, urging all to focus on the trend. The rising trend in house prices appears decidedly more clear.

— Graphics by Vincent Flasseur

No comments so far

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/