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High interest rates put the squeeze on Norway's housing market 

Frazer Norwell
Frazer Norwell - [email protected]
High interest rates put the squeeze on Norway's housing market 
Higher interest rates have contributed to falling house prices in Norway. Pictured is a home in northern Norway. Photo by Andrea Maschio on Unsplash

House prices in Norway fell by 1.9 percent in September, and prices are expected to continue to tumble in the coming months due to high interest rates. 

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The average price for a house in Norway was 4.6 million kroner in September, according to figures released by Real Estate Norway (Eindom Norge) on Wednesday. 

The fall in September has been described as the second weakest on record by the real estate industry organisation. It began publishing statistics in 2019. 

"House prices fell 1.9 per cent in September. Although the seasonal adjustment shows a moderate 0.2 per cent decrease, this is the second weakest September on record. It is only in 2022 that we have had a weaker development in September," Henning Lauridsen, managing director of Real Estate Norway, said of the figures. 

The number of houses sold in Norway was 7.2 percent lower than the year before at just over 9,000. House prices will continue to fall over the next few months, according to Lauridsen. 

"We expect a weak price development in the coming months, and in light of the many interest rate increases, it is surprising that we have not had a weaker house price development until now. As it looks at the moment, the nominal house price development in 2023 will probably end around zero," he said. 

So far this year, house prices have increased by 3.9 percent. 

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In September, the central bank raised the key policy rate in Norway to 4.25 percent and said another interest rate increase was likely in December. Once the key policy rate peaks at 4.5 percent, it is unlikely that any cuts will arrive before the end of 2024. 

Lauridsen has urged the central bank, Norges Bank, to consider any potential effects on the property market when it decides on interest rates. 

"In September, Norges Bank raised the interest rate further and opened up the possibility of a further increase in December. The latter can be cancelled by Norges Bank, as they have already laid the foundations for future financial instability and recession by forcing housing construction to the lowest levels," he said. 

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