(Bloomberg) -- Swedish housing prices extended a decline in May, as central bank rate hikes are expected to add further pressure on the market after a period of stabilization. 

The Scandinavian country’s housing market downturn has become emblematic of a development that is playing out across the world as household finances are squeezed by elevated levels of inflation and rising borrowing costs. 

Seasonally adjusted data from state-owned lender SBAB showed that housing prices declined by 0.6% on in May, sliding for a 14th month out of the last 15. The pace of the decline was the slowest since January when the market appeared to be stabilizing.   

The development remains ambiguous, though, as the value of detached houses continue falling while apartment prices are recovering, most notably in the capital, Stockholm. 

“The price development is once again more fragmented,” SBAB Chief Economist Robert Boije said. “Our estimates of the underlying trend, taking into account typical price fluctuations during the year and the fact that rate hikes are yet to have full effect, indicate that prices will fall somewhat more before finding a bottom.” 

The Swedish central bank in April raised its benchmark rate to 3.75% and said it expects one more increase, to reach a peak rate of 4%. Most forecasters believe the increase in borrowing costs and an expected economic slowdown to continue weighing on the housing market. 

While prices in absolute terms appear to have stabilized or even increased in recent months, seasonally adjusted data indicates that prices have continued on a downward trajectory, albeit at a lower pace than previously.

SBAB’s data, derived from its property listing site Booli, indicate that Stockholm apartment prices have increased every month since the beginning of the year, while overall housing prices have declined by 13% nationwide since April last year. 

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