Swedish economy hit by coronavirus crisis has reacted with changing of housing price, said the banking giant Handelsbanken.
Following the coronacrisis, the Swedish housing market shows evident changes. As Handelsbanken outlines, the future scenarios predict that some sectors of the economy may start their road to recovery later this year. Despite that, economists suggest that the crisis will then start to make itself known on the property market.
In other words, the Swedish retailers are waiting for dropping housing prices. The question is exactly by how much property prices will drop. If we look at homes, construction and the property market in general, no need to forget that the second half of the year will be definitely challenging.
“We expect that activity will be lower than normal and that means unemployment will be higher,” said Christina Nyman, leading economist at Handelsbanken.
Sweden’s economy is coping with coronacrisis so far
The small signs of recovery in early May allow suggesting that Sweden copes with crisis’ consequences so far. In addition, Handelsbanken predicts that prices will continue falling.
The country’s housing market and construction industry have so far coped relatively well with the virus-fuelled economic crisis, but early signs show a stagnating market with a slight drop in prices in April.
Figures put together by Valueguard showed that property prices fell -3.4 percent for the Swedish type of condominium and -1.1 percent for houses.
“We predict a fairly slow recovery from this crisis with high unemployment for several years,” Nyman comments on the post-virus situation.
To sum it up, Handelsbanken predicts that housing prices will fall by around 10 percent in Sweden this year, down from a peak at the start of the year. But if the crisis is drawn out, they could plummet even further. The labour market is a key factor, but also how economic uncertainty affects people’s worries about the future.
As a matter of fact, there’s a lot of uncertainty, but in a scenario where unemployment rises to close to 15 percent. The experts believe housing prices would fall by 20 percent, taking into account that prices were relatively high before the coronacrisis.