Swedish Construction Activity Slows Amid Slump in Housing Market

Swedish home construction is falling as house prices plummet.

Statistics Sweden showed that the number of housing starts in the first half of this year was lower than in the same period last year.

Sweden's broader housing market is showing signs of weakness. Home prices in the Nordic nation fell in June against a backdrop of the largest price increases for consumer goods in three decades. The country's central bank is raising its policy rate in response to rising inflation.

Housing starts continued down during Q2 but somewhat surprisingly the drop was much lower than in Q1. Well, these are preliminary figures and will be revised. The trend ahead should be clearly downwards. pic.twitter.com/RPuDiH9CqK

— Andreas Wallström (@anwallstrom) August 22, 2022

Home prices in Sweden have dropped the most since the financial crisis.

Activity in the building sector may fall further as a result of the price drop and increase in construction costs. According to a report released by the statistics agency last week, construction costs for multi-dwelling buildings rose in July by the largest amount in more than four decades.

After years of trying to increase construction to keep up with demand, housing starts reached their highest level in decades last year. The pace is projected to decline to less than 50,000 starts.

The industry group Byggforetagen has warned of worse conditions in the future. According to the organization, companies could face a shortage of cement as a subsidiary of HeidelbergCement AG faces the end of a permit to mine limestone.