(Bloomberg) -- Swedish households expect home values to rise again after the country’s central bank took comfort in signs that inflation is cooling and kept its benchmark rate unchanged. 

SEB AB’s housing price indicator increased four points to 4 in December, indicating that 33% of respondents now expect to see home prices rise versus the 29% anticipating a fall. The reading, which marks the first gain since August, comes after the Riksbank decided to halt an 18-month tightening campaign that has fed through rapidly to the large proportion of Swedish homeowners who have mortgage rates fixed on short terms. 

While the central bank said it could raise rates again early next year, most economists dismiss the notion that it will go beyond the current 4% level, as price increases are slowing and the economy is weakening. 

“Respondents reacted to general expectations that the Riksbank policy rate has peaked, hence we get an indication that the policy rate will be slightly lower compared to previous surveys,” SEB economists Marcus Widen and Daniel Bergvall said in a note to clients on Monday. 

Households in SEB’s December survey expected the Riksbank’s policy rate to be 4.13% in a year’s time compared with 4.39% in the November poll.

Swedish housing prices became emblematic of the impact of monetary policy tightening in 2022 as they rapidly shed much of the outsized gains posted during the pandemic. After stabilizing this year, the drop has resumed in recent months and several forecasters see scope for further declines, as unemployment starts rising and the country is heading toward two consecutive years of output contraction.  

©2023 Bloomberg L.P.