- An overall drop of 20 percent cannot be ruled out, says SBAB's chief economist Robert Boije.

Residential property prices also fell broadly in July.

This is shown by SBAB and Booli's price index HPI, which is based on all Booli's registered housing sales during the month.

In Stockholm, prices for both apartments and villas have fallen 12 percent, compared to the top listing last year.

House prices fell in all regions in July compared to the previous month, most notably in central Sweden where prices fell by 6.6 percent, followed by the northern parts of the country where prices fell by over 5 percent.

In the Malmö region, prices for villas fell by just over 4 percent.

Even bigger price drop

You have to go back to the financial crisis of 2008 to find an equally large price drop for villas.

For apartments, the price drop was – so far – greater during the financial crisis.

But with continued interest rate increases going forward, the price drop on both apartments and villas will most likely be greater than during the financial crisis, according to Robert Boije.

During the summer months, the housing market certainly tends to cool down, but that is not enough as an explanation for the recent sharp decline, points out Robert Boije.

- The main explanation is, of course, the rise in interest rates.

The summer months are usually cooler on the housing market, but if you look at, for example, metropolitan areas such as Stockholm and Malmö, the decline is significantly greater than can be explained by normal seasonal patterns.

No drama à la 1990s

And you have to be prepared for prices to drop further, says Robert Boije.

- We will see a continued fall in housing prices as the Riksbank raises the key interest rate.

I think there will be another loss in the autumn, says Robert Boije.

However, he is not worried about "some huge drama".

- By that I mean that it is not a question of a crisis similar to the one we had in the 1990s.

It is clear that for individual households it can be dramatic enough with a decline of ten percent or more, if, for example, you get divorced and have to sell your home.