Will it get any easier to get on the property ladder in Norway?
House prices in Norway are expected to rise in the first few months of the year while interest rates will be cut. Neither will happen simultaneously, so will buying a house get any easier this year?
The average cost of a home in Norway at the beginning of the year was just over 4.5 million kroner, according to figures from industry organisation Real Estate Norway.
House prices rose by 0.7 percent in January 2024, when adjusted for seasonal variation.
“The housing market is back,” managing director of Real Estate Norway Henning Lauridsen said when the latest figures were released.
The number of unsold homes, which began to accumulate in the autumn, has also started to fall.
House prices are expected to bounce back in 2024 following a more subdued 2023. Real Estate Norway predicts house prices to rise by 4 percent in 2024.
“Most of the house price growth over the course of a year occurs in the first half of the year, and particularly in January with the ‘January effect’. Given the positive development in January, it will be very exciting to follow the development going forward,” Lauridsen said.
While house price increases are good news for those already on the property ladder, those looking to buy may feel as if the ladder is being pulled up even further out of their reach.
High-interest rates have also made securing a mortgage more difficult. Part of the reason for this is that Norwegian banks are required to test mortgage applicant’s finances against potential interest increases of three percent.
As a result, applicants are typically offered lower loans in the event they can’t service their debt.
READ MORE: What foreign residents in Norway need to know to get a mortgage
Last year saw the key policy rate grow at the fastest rate ever recorded. The key policy rate in Norway is currently set to 4.5 percent, and Norges Bank has said the figure represents the rate peak.
Rates for a mortgage from a bank currently range between 5.7 and 7.7 percent, when borrowing up to the maximum 85 percent of a property’s value. This means that applicants need the finances in place to manage rates of between 8.7 and 10.7 percent – even if the interest rate is expected to fall.
Norges Bank will begin to lower the interest rate towards the end of the year. However, for now, only one rate cut is on the cards for 2024.
If inflation and the Norwegian krone exceed Norges Bank’s expectations, more cuts may be implemented.
Rate cuts are a double-edged sword for those looking to climb the property ladder. Lower rates will make complying with Norway’s mortgage regulations easier. However, lower rates will also increase demand and push up property prices.
Should property price increases outpace mortgage rate cuts, those wanting to buy a home will be worse off overall.
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The average cost of a home in Norway at the beginning of the year was just over 4.5 million kroner, according to figures from industry organisation Real Estate Norway.
House prices rose by 0.7 percent in January 2024, when adjusted for seasonal variation.
“The housing market is back,” managing director of Real Estate Norway Henning Lauridsen said when the latest figures were released.
The number of unsold homes, which began to accumulate in the autumn, has also started to fall.
House prices are expected to bounce back in 2024 following a more subdued 2023. Real Estate Norway predicts house prices to rise by 4 percent in 2024.
“Most of the house price growth over the course of a year occurs in the first half of the year, and particularly in January with the ‘January effect’. Given the positive development in January, it will be very exciting to follow the development going forward,” Lauridsen said.
While house price increases are good news for those already on the property ladder, those looking to buy may feel as if the ladder is being pulled up even further out of their reach.
High-interest rates have also made securing a mortgage more difficult. Part of the reason for this is that Norwegian banks are required to test mortgage applicant’s finances against potential interest increases of three percent.
As a result, applicants are typically offered lower loans in the event they can’t service their debt.
READ MORE: What foreign residents in Norway need to know to get a mortgage
Last year saw the key policy rate grow at the fastest rate ever recorded. The key policy rate in Norway is currently set to 4.5 percent, and Norges Bank has said the figure represents the rate peak.
Rates for a mortgage from a bank currently range between 5.7 and 7.7 percent, when borrowing up to the maximum 85 percent of a property’s value. This means that applicants need the finances in place to manage rates of between 8.7 and 10.7 percent – even if the interest rate is expected to fall.
Norges Bank will begin to lower the interest rate towards the end of the year. However, for now, only one rate cut is on the cards for 2024.
If inflation and the Norwegian krone exceed Norges Bank’s expectations, more cuts may be implemented.
Rate cuts are a double-edged sword for those looking to climb the property ladder. Lower rates will make complying with Norway’s mortgage regulations easier. However, lower rates will also increase demand and push up property prices.
Should property price increases outpace mortgage rate cuts, those wanting to buy a home will be worse off overall.
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