"Instead, we see a continued strong momentum. The strong demand for housing is likely to further drive up prices in the near-term, in our view. The question is rather how much."
Riksbank policymakers have repeatedly made clear that they're worried about Sweden's housing boom. Still, the bank has signalled it will keep its main rate at zero into 2024 to help the broader economy deal with the fallout of the coronavirus pandemic.
Other policy areas should be deployed to deal with the overheated housing market, Governor Stefan Ingves has said.
Meanwhile, the Riksbank's quantitative easing programme has also been blamed by some market participants for adding to imbalances in the housing market, with a large chunk of purchases targeting the covered bonds that finance Swedish mortgages.
Finance Minister Magdalena Andersson has promised to monitor the price development and said last month the government is looking into adding housing supply with new investments.
Thursday's data also showed that prices for single-family houses soared 23 per cent from a year earlier, another record, while apartments cost 12.3 per cent more.
Monthly gains were mainly driven by developments in Sweden's smaller cities.
"We believe that the desire for more living space due to more frequent working from home, also in the post-pandemic world, is here to stay," Maria Wallin Fredholm, an economist at Swedbank, said in a client note. BLOOMBERG
Source of Information: Business Times owned by SINGAPORE PRESS HOLDINGS LTD
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