Households more pessimistic about the house prices

SEB’S HOUSE PRICE INDICATOR IN STEEP FALL. The net difference between those expecting house prices in Sweden to rise and those expecting them to fall over the coming year declined to -24 in September from -2 last month. The drop is of similar size as the large drop we saw in October 2008, immediately after the Lehman crash. This is the third month in a row that we see a large decline in expectations for Swedish house prices. In detail, 50% (cf. 37%) of households now expect prices to fall while the share expecting prices to rise declined to 26% (cf. 35%). 20% of households see unchanged prices and the remaining 4% are uncertain. YOUNGER RESPONDENTS BELIEVE IN HOUSE PRICE INCREASES. There are considerable differences between respondents depending on age. Among respondents between 18 and 24, as many as 51% still expect house prices to increase. The level of optimism declines the older the respondent, with only 14% of senior citizens (66 or older) believing in price increases. Price increase expectations have declined in all age groups over the last months, but the trend is much more distinct among older respondents.
% 70 60 50 40 30 20 10 0

MONDAY 12 SEPTEMBER 2011

Increase 18-24

Decrease 25-49 50-65

Unchanged 66-89

SURPRISINGLY, ONLY 5% PLAN TO FIX RATES within the next three months, despite historically low fixed mortgage rates and the fact that 2Y mortgage rates are currently considerably lower than floating rates. The expectations for the repo rate in one year’s time is a little lower today compared to our last survey, 2.5% (cf. 2.8%) and in line with the Riksbank’s rate path but much higher than market pricing. We still expect households to gradually move towards fixed rate loans to take advantage of the lower yields. Sanna Eckardt, +46 8 506 230 54

Since March 2003 we’ve contracted Demoskop to survey the Swedish housing market every month. This survey was conducted Aug 31 – Sep 7.

SEB's Housing Price Indicator
80 60 40 20 0 -20 -40 -24

Percentage of floating rate holders planning to fix rates within 3 months
25% 20% 15% 10% 5%

-60 -80
03/03 01/04 11/04 09/05 07/06 04/07 02/08 12/08 10/09 08/10 06/11
Source: SEB, Demoskop

5% 0%
02/03 01/04 11/04 10/05 09/06 08/07 06/08 05/09 04/10 02/11
Source: SEB, Demoskop

You can also find our research materials at our website: www.mb.seb.se. This report is produced by Skandinaviska Enskilda Banken AB (publ) for institutional investors only. Information and opinions contained within this document are given in good faith and are based on sources believed to be reliable, we do not represent that they are accurate or complete. No liability is accepted for any direct or consequential loss resulting from reliance on this document. Changes may be made to opinions or information contained herein without notice.

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