In nine months, prices of apartments in Oslo have declined by 14.2%. Leaders in the financial industry believe it is due to strict housing requirements in the capital.
The downturn began for many apartments below 45 square meters, which fell 14.2% from January through
October, 2017. The downturn is shown in statistics from ‘Property Value’, that Dagens Næringsliv newspaper has referred to.
The housing market in Oslo as a whole has had a price decline of 10.1% since its peak in April.
In the new year, Minister of Finance, Siv Jensen of Fremskrittsparti (Frp), introduced new mortgage requirements for the whole country, with extra strict guidelines for Oslo. The provisional regulation is valid until the 30th of June next year.
Nationally, mortgage regulations stipulate that it isn’t possible to borrow more than five times one’s income. However, banks can waive the claim for 10% of loan applications each year. In Oslo, it’s a requirement that you have to own 40% equity when buying a secondary home, and banks can only deviate in 8% of cases.
‘It was an extraordinary situation in Oslo, which made it necessary to tighten up requirements. With the developments we are seeing now, there is no longer the need’, said CEO, Idar Kreutzer, in Finance Norway publication.
On Monday, the Ministry of Finance asked The Danish Financial Supervisory Authority to assess developments in housing prices, and average debt among Norwegian households, and how mortgage regulation has affected these developments. March the 1st has been set as the deadline for the ministry to make a final assessment.
© NTB Scanpix / Norway Today