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Bloomberg
Swedish home construction is falling amid what may be the sharpest drop in house prices since the global financial crisis.
In the first six months of this year, the number of housing starts dropped by 11% compared with the year-ago period, data from Statistics Sweden showed.
The data comes as Sweden’s broader housing market is showing clear signs of faltering. In June, home prices in the Nordic nation fell the most in 14 years against a backdrop of the largest price increases for consumer goods in three decades. In response to surging inflation, the country’s central bank is raising its policy rate, making it more expensive to finance home purchases.
As the current price drop coincides with a large increase in construction costs, activity in the building sector may be poised to fall further. In July, construction costs for multi-dwelling buildings rise by 14.6%, the largest increase in more than four decades, according a report released by the statistics agency last week.
After struggling for years to increase construction to keep pace with the demand of a growing population, housing starts reached its highest level in decades last year, at close to 68,000. That pace is now expected to decline sharply, with consultancy Byggfakta projecting less than 50,000 housing starts in 2022.
At the same time, industry group Byggforetagen has warned of worsening conditions in 2023. Companies could face a dearth of cement, according to the organization, as a HeidelbergCement AG subsidiary that accounts for 75% of Swedish cement supply faces the expiration of a temporary permit to mine limestone at the end of this year.