House prices fell by 1.9 per cent in October 2022. Adjusted for seasonal variations, prices fell by 0.8 per cent.
House prices in Norway have so far in 2022 risen by 4.7 per cent.
The average price for a home in Norway was NOK 4,328,496 at the end of October.
- House prices continue the weak development from September and fell further by 1.9 per cent in October. The price drop is mainly due to the fact that interest rates have been raised sharply throughout the year, says CEO of Eiendom Norge, Henning Lauridsen.
- If Norges Bank follows the interest rate path, households' interest expenses will have roughly doubled through 2022. The development in September and October illustrates how interest-sensitive the Norwegian housing market is, and we will ask Norges Bank to proceed more cautiously from now on, says Lauridsen.
- According to the new Central Bank Act of 2019, Norges Bank has a three-part mandate, of which financial stability including the housing market is one. Norges Bank must therefore, in addition to the inflation target, also take into account financial stability and high production and employment. The inflation target is also forward-looking, which means that Norges Bank will not necessarily be as aggressive in setting interest rates as we have seen through the second half of 2022, he says.
Still big sales and bigger offers
In October, 7,973 homes were sold in Norway, which is 8.2 percent fewer than the corresponding month in 2021.
So far this year, 81,062 homes have been sold in Norway. That is 9.3 percent fewer than in the same period last year.
In October, 10,447 homes were put up for sale in Norway, which is 7.7 per cent more than in the same month in 2021.
So far this year, 92,131 homes have been put up for sale. That is 1.8 percent fewer than in the same period last year.
- Turnover in the housing market is now back at pre-pandemic levels. We expect that the total turnover in the housing market in Norway in 2022 will end at the level of 2019. Now that the pandemic is over, it can be stated that the pandemic triggered an extra lot of moving in Norway, says Lauridsen.
It took an average of 29 days to sell a home in October, which is the same as in September. Bergen has the fastest sales time with 19 days. Tromsø had the longest sales time with 37 days.
- Compared to previous years, it is still possible to sell a home quickly in all parts of the country, he says.
Much is now in the hands of the authorities
Follo had the strongest seasonally adjusted price development in October, where prices rose by 0.3 per cent.
Oslo and Hamar with Stange had the weakest seasonally adjusted price development, with a seasonally adjusted decrease of 1.9 per cent.
Kristiansand has seen the strongest development so far this year, with an increase of 9.1 per cent, followed by Stavanger and surroundings at 7.8 per cent and Drammen and surroundings at 7.3 per cent.
Oslo has the weakest development so far in 2022, with an increase of 2.9 per cent.
- There was a weak development in most areas in Norway in October. In some areas, especially Oslo, there was very weak development in October. We expect that the weak development in the housing market will continue throughout the year and it is not unlikely that house price development in Norway in 2022 will end at around 0 per cent, says Lauridsen.
- When it comes to the further development of the housing market in 2023, much is now in the hands of the authorities. The Ministry of Finance will clarify the lending regulations before the New Year, Norges Bank has its last interest rate meeting of the year in mid-December and a new Financial Agreements Act with the innovation obligation to refuse comes into force on 1 January.
- The new Financial Agreements Act and normalization of the interest rate make the lending regulations redundant and potentially harmful. Therefore, we expect Finance Minister Trygve Magnus Slagsvold Vedum (Sp) to abolish the lending regulations from the new year. Maintaining strict lending regulations on top of such high interest rates is something that has never been tried before. It is an experiment with the housing market and financial stability, concludes Lauridsen.