The housing market still showing strenght.
House prices rose by 0.9 per cent in May 2024. Adjusted for seasonal variations, house prices rose by 0.6 per cent.
So far in 2024, housing prices in Norway have risen by 8.2 per cent.
The average price for a home in Norway was NOK 4,786,495 at the end of May.
- House prices rose by 0.9 per cent in May, which resulted in a strong increase of 0.6 per cent seasonally adjusted. The housing market still showing strenght and so far in 2024 house prices have risen by as much as 8.2 per cent. That's more than at the same time in both 2022 and 2023 - two years of strong growth in house prices in the first five months of the year, says managing director Henning Lauridsen of Eiendom Norge.
- The housing price trend so far in 2024 is far stronger than what we envisioned at the start of the year, and in retrospect we overestimated the effect of the interest rate increases and underestimated the wage increases on house prices, he says.
- With the falling number of completed new homes going forward due to the failure of sales in the new housing market, population growth and centralization and upcoming interest rate cuts, we expect the housing development this year will be stronger than our forecast for the year under one with an increase of 4 percent.
Record number sold
In May, 10,900 homes were sold in Norway, which is 5.1 per cent more than the corresponding month in 2023.
So far this year, 41,657 homes have been sold in Norway, which is 4.6 per cent more than in the same period in 2023.
In May, 14,297 homes were listed for sale in Norway, which is 10.5 per cent more than in the same month in 2023.
So far this year, 46,683 homes have been put up for sale in Norway, which is 5.8 per cent more than in the same period in 2023.
- A large number of homes were both sold and advertised in May, and in fact there have never been as many homes sold during the month of May as this year. It illustrates how much gunpowder there is in the housing market during the day.
- When we also had two long weekends in May, which affects the pace of viewings, it underpins the weakness in the housing market at the moment, he says.
It took an average of 44 days to sell a home in May, down from 54 days in April. Oslo and Bergen had the shortest sales time with 23 days. Tromsø had the longest sales time with 104 days.
Differences in price trends
Porsgrunn/Skien had the strongest seasonally adjusted price development in May, with a seasonally adjusted increase of 2 per cent.
Kristiansand and its surroundings had the weakest seasonally adjusted price development in May, with a seasonally adjusted decrease of 0.5 per cent.
Bergen has the strongest development so far in 2024 with 11 per cent. Bodø m/Fauske has the weakest development so far this year, with an increase of 5 per cent.
- So far this year, there has been a strong rise in house prices in all areas, and Bergen, Stavanger, Ålesund and Porsgrunn/Skien stand out with particularly strong development, says Lauridsen.
The government is blind to the housing crisis
In May, the Støre government presented its proposal for a revised state budget for 2024.
In the state budget in October, the government estimated housing investment to fall by 4 per cent this year. In the revised version, they have adjusted the fall upwards to a drop of a whopping 16.1 per cent.
- The upward adjustment is in line with our input to Finance Minister Trygve Magnus Slagsvold Vedum (Sp) in November last year. But even though the Ministry of Finance has now corrected the massive calculation error and taken the major setback for housing construction to heart, they have no counter-cyclical measures.
- Lack of measures will reinforce the imbalances we have seen in the housing market in recent years with strong rental price growth, falling housing construction despite great need and a large mismatch between construction costs and housing prices, he says.
- The government could do so much more if they wanted to. They could reduce taxes and especially wealth tax, which drives up rents and affects the poorest the most, and they could lift the lending regulations in the King's Cabinet as early as Friday to stimulate demand, he says.
- They could also put the directly harmful proposals on further regulation of the housing market that they have announced in the housing announcement in the drawer. In particular, the proposal that the municipalities should be given the opportunity to decide the form of ownership in new housing projects would inhibit housing construction even further, concludes Lauridsen.
