Norway houses prices overvalued: IMF

Norway's house prices are amongst the most over-valued in the OECD, the International Monetary Fund has warned as it launches its new Global House Price Watch.

Norway houses prices overvalued: IMF
Oslo - Photo: Simen Schikulski
According to the IMF's survey of 51 OECD countries, only houses in New Zealand and Canada are selling at a greater divergence from their historic price-to-rent ratio, while houses in Norway were the seventh most expensive in comparison to average incomes. 
In a blog post on Thursday, IMF Deputy Managing Director Min Zhu  called for country's to take action to contain house prices or risk a future financial crisis. 
"Our research indicates that boom-bust patterns in house prices preceded more than two-thirds of the recent 50 systemic banking crises," he wrote. 
Here's a chart comparing Norway's deviation from historic price-to-rent ratios: 
And here's once comparing the relationship between house prices and average incomes: 

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Norwegian house prices continue slight fall

Property prices in Norway fell by 1.1 percent in December, or 0.5 percent taking seasonal adjustments into account.

Norwegian house prices continue slight fall
File photo: Vegard Wivestad Grøtt / NTB scanpix

House prices at the beginning of 2018 are at a lower level than at the same stage of last year, said Christian Vammervold Dreyer, CEO of Real Estate Norway, which announced the figures on Thursday, to broadcaster NRK.

“The negative development in house prices continued in the last month of 2017. Although a fall in prices in December is normal, this is a weaker development [for house prices] than normal,” Dreyer told NRK.

In addition to the December figures, Real Estate Norway said house prices had fallen by 2.1 percent overall during the whole of 2017.

That represents the first year-on-year decrease in the price of housing in Norway since 2013.

Regional figures show that the trend of falling prices also holds for all of the country’s major cities, writes NRK. In December, prices in Oslo fell by one percent and were down by as much as 11.5 percent on the 2017 peak, which was reached in April.

The biggest December drop of 2.2 percent was recorded in Bergen.

“There are big differences between the large cities and smaller areas,” Dreyer told NRK.

The price decrease last month was “exactly as expected,” said CEO of the Norwegian Association of Real Estate Carl O. Geving.

“Our assessment is that the housing market is finding its comfort zone. Price levels are in most places more comfortable, and buyers have come down off the fence,” Geving told NRK.

READ ALSO: Norway's housing market had historic boom in 2016