House prices can be expected to fall 5 percent or more in Oslo, and somewhat less elsewhere in the country, it is reported in a report on housing prices that Nordea presented on Monday.
Developments in the prices of new housing in Oslo may push down prices further, according to a report from Norway’s second largest bank, Nordea.
Since the beginning of the 2000s, housing prices have risen by 200 per cent. An average home costs today 4.7 times the income, against 3 times the income 15 years ago.
However, when adjusting for the fall in interest rates and the revenue increase, Nordea analysts find that an average buyer uses about the same amount of income today as at the turn of the millennium to manage interest and deductions. For Oslo, this share is 32 per cent and for the rest of the country 22 per cent – both in 2000 and in 2017.
New and stricter mortgage regulation has slowed down prices, while the recent years have been built and launched several new housing projects. With more housing in the market, inflation has slowed further.
According to Nordea, there is an additional price cut on new homes because sales have slowed down. The bank assumes that it will still be profitable projects even with lower retail prices, and that the developers will eventually cut prices.
But – even with a fall of 5 percent, prices will still be 20 percent above the bottom level in 2013, it is emphasized in the Nordea analysis. Thus, there is still reason to wait for further construction of new housing, albeit at a slower pace than last year, according to the Bank’s assessment.
© NTB Scanpix / Norway Today