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


Property in Norway: Prices rise nationwide but fall in Oslo

The price of a property rose 1.2 percent across Norway in March but fell by same the amount in the capital Oslo. Overall house prices are now 12 percent higher than they were a year ago.

Property in Norway: Prices rise nationwide but fall in Oslo
Photo by Jacek Dylag on Unsplash

The growth is just over one percent higher than what is considered average growth according to new figures from real estate organisation Eiendom Norge.

A house sold on the market in March took 43 days to sell, over a week shorter than the month before when it took an average of 51 days

Figures show that less people currently own a home due to rising house prices. According to Statistics Norway the proportion of tenants has increased by around one percent.

This growth in house prices is not expected to last much longer, however.

“With the increased supply we have seen in March, inflation will probably slow down somewhat towards the summer,” CEO of Eiendom Norge, Hennig Lauridsen said at a press conference.

Nejra Macic chief economist at the Forecast Centre, an independent market analysis company, told state broadcaster NRK that she believes March may be the last month where house prices rise in Norway.

“If it is not March (the last month with growth), we do not think it will be long. We have covered most of the growth this year,” she said

Kari Due Andersen, chief economist at Handelsbanken, agrees with this and believes that due to floating mortgage rates house price growth will soon slow down.  

“It is a rule of thumb that says that the mortgage rate that people have in the bank is on average 2 percentage points higher than interest rates. That is because the banks adjust the key policy rate to costs. When the key policy rate rises, so does the mortgage rate. Then a mortgage becomes more expensive, and many have floating interest rates. It is a factor that will contribute to house price growth slowing down, and that households will wait,” she told NRK.

Despite the fall in March, house prices in Oslo are still up 15.6 percent compared to last year. Grethe W. Meier, CEO, of Privatmegleren, told online news site Nettavisen that the drop was not concerning.

“I think it is important to see February and March together. In addition, in March, the proportion of small apartments fell. It is probably these apartments that have been driving the price up, and they are more volatile. When that share has fallen it helps to lower prices,” she said.

READ MORE: Property in Norway: What to expect if you’re buying a home in Oslo

Those looking to buy a home received warning from Norway’s central bank, Norges Bank, that interest rates could rise this autumn rather than next spring.

“It has helped that people have understood that the bottom has been reached for mortgage rates, and that there is only one way interest rates will go in the future. When it downs on people that interest rates will rise then house price expectations will also weaken. Then there will be an increasing number of people who will sell before they want to buy. Then the pressure and bidding wars will disappear. But it will take time and will not change overnight,” said Macic.

House prices March also rose in Norways other biggest cities 

  • In Stavanger, the increase was 0.7 percent. Prices are up 7.9 percent in the past twelve months
  • In Bergen, prices rose by 3.0 percent, and have increased 12.7 percent in the last 12 months
  • In Trondheim, prices were up 2.2 percent and have risen 10.6 percent in the past 12 months.