'More of a buyers market': What falling house prices in Norway mean for you
Norway's property market has shown signs of cooling off in the last couple of months. But what should buyers expect moving forward? The Local spoke to a real estate expert to find out what you need to know.
House prices in Norway have fallen by 6.5 percent between September and November of 2022. In December, they dipped by another 0.9 percent.
The current consensus among real estate analysts and commentators is that home prices will continue to fall throughout 2023.
But what does that mean for buyers? Should they wait some more before "pulling the trigger" and purchasing a home, or should they try to buy property as soon as possible? What will happen with the prices in the short to medium term?
If you're asking yourself these questions – you're not alone.
The cost-of-living crisis has squeezed the personal finances of many Norwegian consumers, so, naturally, they want to make sure that they make a financially sound decision when it comes to one of the most significant purchases one can make in a lifetime, that is, buying a home.
Property prices: Short-term perspective
Industry experts expect housing prices to continue falling in the first quarter of 2023 – especially when it comes to newly built homes.
Carl O. Geving, the head of the Norwegian Real Estate Association, told The Local that he is somewhat more optimistic than most commentators.
"I'd say prices will probably decrease some more in the first quarter of the year. We have the January effect – which is usually an increase – but that will be followed by a decrease in February and March. After that, I expect a soft landing.
"I'm more optimistic than most commentators. We've seen a decrease in the number of sales from January 2022 and throughout last year, approx. a seven percent price decrease from September to December of 2022, and I think we've seen most of the fall in prices – although there will be a bit more in the coming months," Geving said.
The expert noted that the situation with newly built homes is somewhat special due to the high costs of construction.
"When it comes to new homes, the situation is a bit more complicated. The number of sales is likely to fall for the first half of the year, up to the summer, as building costs are still relatively high.
"Normally, there is competition between second-hand and new homes, but because of the lower prices of used homes, newly built ones will likely lose the competition for the first six months of the year.
"After that, I expect new homes to strongly rebound in the summer and autumn when the lack of inventory and low construction volumes will start affecting prices again," Geving explained.
Is this a good time to buy?
So, if you're considering buying a property in Norway, is this a good time to do so – or should you wait a few more months?
"I'd say this a pretty nice time to buy. The market is not heated as it was in 2022; it's more of a buyers' market. The supply of second-hand homes is better than it has been for a long time. It has somewhat normalised; it's more like 2019 and 2018. Sellers are not expecting the same high prices as one year ago. So, this is a good time, yes," Geving said.
The head of the Norwegian Real Estate Association also believes that buying a home is preferable to renting – of course, if one can afford to do so.
"Normally, it is always better to buy (a home) if you can afford it. Of course, it depends on the interest rate going forward, but the interest rate will probably top out soon, maybe in March, around three percent.
"It will probably start decreasing maybe already in Autumn or 2024 at the latest. But to sum it up, if you can afford it, buying is always better than renting," Geving concluded.