Sweden's Inflation Steadies at 2% Amid Growing Housing Market Price Divides

As of January 2026, Sweden's inflation rate, measured by the KPIF, stabilized at 2.0%, with underlying inflation excluding energy (KPIF-EX) slightly lower at 1.7%. This marks a significant decrease from the 10.2% inflation peak recorded in December 2022, indicating a return toward the Riksbank's 2% inflation target. Inflation, which reflects general price increases and erodes purchasing power, has been more stable since the mid-1990s due to the inflation target and the central bank's independence, according to the Statistical Central Bureau (SCB).

Meanwhile, Sweden's housing market is showing a growing divide influenced by inflation and rising interest rates since 2022. In central Stockholm, prices for the most expensive condominiums have surged to record highs, while lower-priced properties remain significantly depressed and have not recovered since 2021. This split contrasts with trends from 2018-2019 when luxury homes saw the largest percentage price drops.

Erik Holmberg, an analyst at housing platform Hemnet, attributes this divide to pandemic-driven shifts where affluent buyers favored urban living after a period of suburban migration. However, as interest rates increased and workers returned to offices, demand for expensive city center apartments rose again. Holmberg also notes that economically weaker households have been hit hardest by inflation and rate hikes, reducing their ability to participate in the housing market. Ulrica Hedman, CEO of Fastighetsbyrån, adds that luxury property prices are increasingly tied to stock market performance, which has remained relatively strong despite economic recessions. This pattern is observed in Stockholm and Gothenburg but not in Malmö, where lower prices continue without similar upwards momentum.

Looking ahead, easing amortization regulations and higher loan limits expected this spring are predicted by Holmberg to gradually narrow the price gap, although the disparity between expensive and affordable properties may persist in the short term.

Overall, while Sweden's inflation environment has calmed closer to the central bank’s goal, inflation and monetary policy shifts continue to distinctly shape housing market dynamics across regions and socioeconomic groups.