Households still expect house prices to fall

SEBS HOUSING PRICE INDICATOR UP TO -17, but still stuck in a fairly small range with most households expecting prices to decrease or stay unchanged. In Januarys survey, 69% (cf. 70%) of respondents believe house prices will decrease or stay unchanged over the coming year. More specifically, 43% (cf. 50%) of the households expect prices to fall while 26% (cf. 20%) believe house prices will stay unchanged. The share expecting prices to rise was unchanged at 26% for the third month in a row. HOUSE PRICES ARE FALLING. During 2011, we saw house price slowing down and the last three months, the prices have decreased. In November, the downward trend was confirmed by an annual decrease of 2.5%. Januarys positive change in the housing price indicator is probably too small to give substantial support to the housing market. Not only SEBs housing price indicator has stabilized at low levels during the fall, also consumer confidence has seen small changes stabilizing around -7.5. Mortgage rates increased in December which possibly have a further negative impact on the December house prices (presented on Thursday).
150 SEB's housing price indicator 125 100 75 50 25 0 -25 -50 -75 05 06 07 08 09

MONDAY 9 JANUARY, 2012

Swedish house prices on decline

15.0 12.5 Price change, % y/y 10.0

7.5 5.0 2.5 0.0

-2.5 -5.0 -7.5 10 11

SCB's house price barometer, 3 months avg vs last year SEB's housing price indicator (LHS)

HOUSEHOLDS EXPECT NO CHANGES TO THE REPO RATE. Since our last survey, the expectations for the repo rate in one years time have fallen, from 2.25% to 1.78%. Expectations are now in line with the Riksbanks main scenario to remain on hold at 1.75% throughout 2012. Still, a 30% probability for a cut in February has been signalled. The SEB forecast is a cut in February, followed by two more cuts in April and July, resulting in a repo rate at 1.00% at the end of this year.

Sanna Eckardt, +46 8 506 230 54

Since March 2003 weve contracted Demoskop to survey the Swedish housing market every month. This survey was conducted Dec 27 Jan 4.

SEB's Housing Price Indicator

80 60 40 20 0 -20 -40

Percentage of floating rate holders planning to fix rates within 3 months

25% 20% 15%
-17

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 01/12
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.