The fall in housing prices continues
Housing prices fell by 2.2 per cent in November 2022. Adjusted for seasonal variations, prices fell by 0.9 per cent.
House prices in Norway have so far in 2022 risen by 2.4 per cent.
The average price for a home in Norway was NOK 4,208,039 at the end of November.
- The sharp fall in house prices continued in November with a decrease of 2.2 per cent. In the last three months, house prices have fallen by 6.5 per cent and some areas now have negative 12-month growth, says CEO of Eiendom Norge, Henning Lauridsen.
- With higher interest rates, it is not unnatural for house prices to be corrected, but a large fall in house prices will have negative consequences for the Norwegian economy through both lower consumption and lower housing construction, he says.
- Debt and housing prices are closely linked and we would therefore urge the banks not to tighten too much on both interim financing and mortgages. The housing market is driven by real needs, and too large a correction in the housing market now will only create bigger problems later. There is a need for the homes that are not being built now, he says.
- Through 2022, most things in the economy have changed, and high interest rates with lending regulations and the new Financial Agreements Act from the new year are an experiment. Finance Minister Vedum (Sp) must therefore take the lending regulations out of the equation, says Lauridsen.
Volume at prepandemic levels
In November, 7,321 homes were sold in Norway, which is 14 percent fewer than the corresponding month in 2021.
So far this year, 88,383 homes have been sold in Norway. That is 9.7 percent fewer than in the same period last year.
In November, 7,410 homes were put up for sale in Norway, which is 2.1 percent fewer than in the same month in 2021.
So far this year, 99,541 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 the pre-pandemic level. This also means that activity will decrease as normal in November and December.
- In 2021, a historically high number of homes were sold at the end of the year, both as a result of the pandemic, but also because many wanted to sell before the new Disposal Act came into force on 1 January 2022. It is likely that the bottlenecks on the supply side as a result of the Disposal Act meant that it took longer time before interest rate increases hit the housing market, says Lauridsen.
It took an average of 34 days to sell a home in November, up from 29 days in October. Oslo and Bergen have the fastest sales time with 24 days. Hamar m/Stange had the longest selling time with 53 days.
- The sales time is increasing somewhat, but it is still very fast to sell a property in Norway, he says.
The housing market in Vedum's hands
Kristiansand had the strongest seasonally adjusted price development in November, where prices rose by 0.4 per cent.
Bergen had the weakest seasonally adjusted price development, with a seasonally adjusted decrease of 2.6 per cent.
Kristiansand has seen the strongest development so far this year, with an increase of 8.4 per cent, followed by Stavanger and surroundings at 6.8 per cent and Drammen and surroundings at 4.6 per cent.
Tromsø has the weakest development so far in 2022 with an increase of 0.2 percent.
- There was weak development in most areas in Norway with the exception of Kristiansand and Stavanger and surrounding areas. Many areas in Norway will probably end up with negative developments in house prices when we present the December figures in January, says Lauridsen.
- The further development of the housing market is in the hands of Finance Minister Trygve Magnus Slagsvold Vedum (Sp). Our advice is whether the future of the lending regulation is crystal clear: It should be abolished. The regulation has played its role because the justification for it, high interest rates, is no longer present.
- With the normalization of the interest rate, there is in particular the requirement that loan customers must bear a five percentage point interest rate surcharge, which makes it difficult to provide credit to ordinary households in rural and urban areas. Loan applicants are now stress tested for an interest rate of around 9 per cent.
- Maintaining the regulation at a time when interest rates are no longer low is an experiment with the housing market, financial stability and the Norwegian economy, concludes Lauridsen.