Strong rise in house prices in April
House prices rose by 1 per cent in April 2023. Adjusted for seasonal variations, prices rose by 0.7 per cent.
So far this year, house prices in Norway have risen by 6.8 per cent.
The average price for a home in Norway was NOK 4,594,966 at the end of April.
- House prices rose sharply in April after a strong development in March as well. In light of the fact that the key interest rate has now reached its highest level since 2008, the development is sensational. The housing market is less sensitive to interest rates than many thought, including us, says CEO Henning Lauridsen of Eiendom Norge.
- We link the development to the fact that there is a strong development in the Norwegian economy and a strong labor market in combination with the relaxations in the lending regulations. The latter has meant that ordinary home buyers have regained the purchasing power they lost in the autumn, he says. The low supply of new homes means that more people have to choose used homes.
- In recent months, the weak krone has dominated the news. For travel-loving Norwegians and imported consumer goods, this is negative. But for the export industry and the tourism industry, this is positive, and something that will strengthen the Norwegian economy and, secondarily, the housing market, he says.
Many homes sold
In April, 6,919 homes were sold in Norway, which is 10.2 percent fewer than the corresponding month in 2022.
So far this year, 29,294 homes have been sold in Norway, which is 3.2 per cent more than in the same period in 2022.
In April, 9,695 homes were listed for sale in Norway, which is 15.4 per cent more than in the same month in 2022.
So far this year, 31,096 homes have been let in Norway, which is 0.4 per cent more than in the same period in 2022.
- Although Easter in its entirety fell in April this year, turnover is large and so far in 2023 the volume is on par with the years before the pandemic. The boards of directors the pandemic and the new disposals act created in the housing market in the first half of 2022 are now completely because, says Lauridsen.
It took an average of 40 days to sell a home in April, down from 42 days in March. Bergen had the fastest selling time with 22 days. Tromsø had the longest sales time with 71 days.
Who will pay: the construction costs or the house prices?
The strongest seasonally adjusted price development in April was in Ålesund and its surroundings, where prices rose by 1.3 per cent.
Stavanger and its surroundings had the weakest seasonally adjusted price development, with a seasonally adjusted increase of 0.2 per cent.
The strongest development so far in 2023 is in Kristiansand and Stavanger and its surroundings, with an increase of 10.8 and 10.4 per cent. While the weakest development so far this year is Tromsø with an increase of 4.4 per cent.
- In the short term, it is the demand side that determines housing price developments. In the long term, it is the supply side through housing construction that decides. At the moment, the development on the supply side through new home sales is going from bad to worse, says Lauridsen.
- We now have the lowest sales of new homes since the financial crisis and we may soon touch bottom. This gives very gloomy forecasts for housing construction in the coming years, which will put strong pressure on second-hand housing prices in places where too little is being built, he says.
- In order to speed up new home sales again, either building costs must go down or house prices must go up. Many new housing projects are difficult to calculate due to high construction costs in combination with increased financing costs. The problem grows every time interest rates are raised because costs become higher.
- The state and municipalities can no longer read more and more requirements for new housing. We expect that the government in housing minister Sigbjørn Gjelsvik (Sp) will address this urgent problem long before the announced housing announcement which will not come until spring 2024, concludes Lauridsen.