– December was surprisingly positive, quite simply, says chief economist at the Forecast Center Nejra Macic.
She had expected a nominal fall in house prices of 1.5 per cent. Instead, they only fell by 0.9 percent.
– It was a weaker decline than expected, so it will be a fairly soft landing in the last month of last year.
FALL: House prices fell in December, but not adjusted for seasonal variations. Photo: Thomas Evensen / TV 2
Increase despite decline
Housing prices almost always fall in December. But in the last month of last year, they fell less than what is the seasonal effect this month.
When adjusting for the expected fall in prices, there was actually an increase in house prices this December of 0.2 per cent.
– It is not good to say what is the cause. Evidently, housing demand is still relatively strong and stable. We are among those who have not expected a price crash or a dramatic drop in prices, but we have always said that we believe they will be corrected slightly downwards as a result of the interest rate increases, says Macic.
ECONOMIST: Nejra Macic, Chief Economist at the Prognosesenteret believes it is positive that house prices did not fall more in December than they did. Photo: Christoffer Andreassen / TV 2
– Buyer’s market
Cecilie Tvetenstrand, consumer economist at Storebrand, believes that the general fall in the housing market over the past year is good news for many.
– It is not necessarily negative that housing prices have fallen somewhat. There was an abnormal increase during the pandemic, she says.
Tvetenstrand believes that those who want to buy a home have more options now.
– It is a bit of a buyer’s market now. If you are buying your first home, or buying up, it may be that you can make good purchases in the future, says Tvetenstrand.
She receives support from the managing director of Privatmegleren, Grethe Meier.
– If I were a home buyer now, I would have started to find out. Although I think house prices will fall somewhat in the next few months, I would start to see. Now you can make good purchases. You can be the only home buyer and negotiate directly with the home seller, says Meier.
BUY: CEO of Privatmegleren, Grethe Meier believes that home buyers have more options now. Photo: Truls Aagedal / TV 2
For the sellers, it looks darker.
– I think that there are many people who bought a home at the beginning of 2022 who think it is a bit painful to look at the development now, says the consumer economist.
Tvetenstrand believes that those who have to sell down, for example due to a break-up, are hit harder now than in the past.
– You probably have to expect that it will take a little longer to sell your home. Although it still sells fairly quickly, you should be prepared for it to take longer. And have realistic expectations of what price you can get.
The mortgage costs more
From the new year, it has become easier for first-time buyers to enter the housing market.
The banks can assume an interest rate increase of at least three percentage points, or that you must tolerate a minimum mortgage interest rate of 7 per cent, when they assess the customer’s serviceability. This is down from last year’s requirement of five percentage points.
Tvetenstrand nevertheless emphasizes that this does not mean free movement for the patrons.
– It is important to remember that interest rates themselves put a brake on how much you can borrow. If you compare it to a year ago when the interest rate was over 2 percentage points lower, you will have to put up with the same interest rate. The change is an adaptation to the current interest rate, she says.
She believes people are now more aware of how much the loan will cost them.
– Before, it was more common to ask for as high a loan as possible, says Tvetenstrand.
She adds that we have no guarantee that the interest rate will not continue to rise. Therefore, saving is extra important going forward.
– Find out how much you have to pay for the loan each month. And if you are going to take out a loan now, turn to setting aside an extra amount for savings every month. Then changes will not come as a surprise to you.
The interest rate effect kicks in in February
Norges Bank raised the key interest rate to 2.75 per cent on 15 December last year. It was the sixth rate hike of the year.
The effects of this have not yet hit the market, it will only happen in mid-February, predicts Nejra Macic in the Forecast Centre.
– January and February will be months where you notice interest rate increases on house prices. But the relief in the mortgage regulations will moderate the fall throughout the first quarter of 2023, she says.
BANK: Norges Bank raised the interest rate several times in 2022. Now the key interest rate is 2.7 per cent. Photo: Frode Sunde / TV 2
Population growth also affects the market – in 2022 it was very strong, driven by Ukrainian refugees who came to Norway. Therefore, rental prices have risen much more than ownership prices.
– There have been fewer owner-occupied homes and stronger demand in the rental market. This has led to strong rental price growth. In such situations, this means that the overall housing demand is still stable. But the pressure has shifted from the ownership to the rental market.
– This is an indicator that the housing market will not go completely wrong, says the chief economist.
In a longer perspective, house prices are still high, despite the fact that prices have fallen monthly since September. In November 2022, prices were 16 per cent higher than in November 2019, i.e. before the pandemic.
– We have brought with us strong growth through the pandemic, house prices have to fall quite a lot for it to be a fall that causes unrest and causes house prices to fall to a level that can be described as low, says Macic.
