After several years of a strong housing market, it now appears to be cooling down. House prices are falling for the fourth month in a row.
In December, the decrease is 0.9 per cent, according to Eiendom Norge. Norges Bank and Statistics Norway predict that house prices will continue to fall between 4.3 and 8 percent this year.
If you are going to sell your current home and buy a new one, it can still be very expensive. This is because of an expense that many people are not aware of.
The dream home
Chief economist Nejra Macic at the Prognosesenteret and her roommate experienced this when they found their dream home in September last year.
Then house prices were on the way down and the couple bought a house well below the asking price.
– Falling house prices can be good if you buy up. We seized the opportunity to buy something bigger and more expensive together, says Macic.
But Macic still had to shell out a lot more than she thought.
Housing split
The chief economist had not sold her own home before she bought the new one.
Two weeks after the purchase, Macic put his own home up for sale. But then there were few people on display and everyone was waiting for the price to drop further.
– There was something about the expectations of the buyers. But after a while it worked, says Macic.
CONCERNED: Nejra Macic is concerned that people are not aware of how much it costs to have intermediate financing Photo: Christoffer Andreassen / TV 2
She was able to sell the home in November last year. Two months after they bought their dream home.
– Then you have a period of two months during which you sit on both the homes and the loans. The takeovers were also two months apart, says Macic.
Disappointed
What surprised the chief economist was the price of the intermediate financing, i.e. the price of having two mortgages at the same time.
– I was surprised at how high the interest rate on intermediate financing was. For me, it was two percentage points higher than the normal mortgage interest rate. I was not aware of that, says Macic.
The chief economist’s mortgage rate was 3.7 and the intermediate financing rate was 5.7 per cent, last autumn.
The bridging interest rate varies from different providers, but is normally higher than the normal interest rate.
– I’m a little disappointed in myself. Because I didn’t know what we had in store, despite the fact that I work with analysis of the housing market, says Macic.
Worried
Macic is concerned about many people who are in a vulnerable financial situation and have to move.
– It’s not a sin for me and my partner, we have the finances to cope with the interim financing. People who have to move due to a lack of space in connection with family growth, or couples who divorce can be stuck in a really awkward situation with two homes for a long time, says Macic.
That is why she believes that it can be worthwhile for some people to sell the home they own before buying another.
– In periods where it takes longer to sell the home, it becomes quite stressful from the second you have bought a new home until you sell your old one, says Macic.
– Most dangerous I’ve seen
CEO of Privatmegleren, Grethe Meier, disagrees with Macic. She warns against selling before buying.
– It is the most dangerous thing I have seen many people do. Then you can stand there after handing over your own home without anywhere to live, says Meier.
OPPORTUNITIES: Grethe Meier, managing director of PrivatMegleren, says that the drop in house prices will make it easier for first-time buyers to enter the housing market. Photo: Gorm Røseth / TV 2
The top broker fears that many in this position will make hasty purchases.
– There is too little time to find the home you most likely want. There are many examples of people who have bought a new home in a hurry, and later regret it. In the worst case, many people have to rent, says Meier.
– Don’t you risk paying for two loans, where one is more expensive?
– You can take out insurance on the interim financing. If you are not allowed to sell your own home, the insurance then covers the interest costs on the double loan for a period. It is a cheap investment, says Meier.
