The job crunch and financial downturn have failed to dampen Norwegians’ spirit when it comes to house purchase. Experts hope the real estate market will witness positive development in 2021.
Norway’s skyrocketing housing prices have been in the news for quite some time now.
The prices were up by 5% y-o-y, the fastest growth since 2017, in June-July this year.
According to some reports, cheaper mortgage rates and the Central Bank reduction of its key policy rate to a record low during the pandemic are responsible for the surge in prices.
In order to get a more detailed insight, Norway Today contacted two Norwegian experts from the country’s real estate sector.
According to the CEO of the Norwegian Association of Real Estate Agents Carl O. Geving, the housing prices in Norway are now, on average, 7.1% higher than a year ago.
The volume of sales is also higher.
According to Geving, 5.5% more houses have been sold so far this year, compared with the same period in 2019.
“Mortgage rates were lowered in March and April to help with the economic situation due to the corona pandemic.
“That is the main reason why housing prices have risen more than expected.
“People tend to experience the housing market as safer in relation to alternative investments.
“They tend to spend money on their home when, for example, they are not able to travel abroad,” Geving said.
The expert pointed out that there has been an increase in housing prices throughout the country.
Highest prices in Oslo
The strongest price growth has been registered when it comes to apartments in Oslo.
However, neither the price spike nor the COVID-19 crisis deterred Norwegians from buying properties, industry experts noted.
According to them, though autumn is usually a quieter time in the housing market, there are still many buyers who want to secure a new home.
Therefore, unusually strong demand for the season persists.
“Homes are sold almost as usual. Due to the coronavirus, the industry introduced some regulations in relation to viewing appointments with realtors instead of having open houses, but this has not affected sales much,” Geving said.
Real Estate Norway CEO Henning Lauridsen voiced a similar opinion.
“More Norwegians want to buy homes when prices are rising”
“When COVID-19 came to Norway, there was a sharp drop in home sales. The housing prices also became slightly lower for a short period during the spring, before they started to rise in May.
“As of early October, housing prices were up 7.1% countrywide compared to a year ago, with the capital Oslo showing a 9.5% price increase.
“According to economic theory, people buy less when prices are rising, but it’s the opposite when it comes to houses in Norway.
“When prices are rising, more people want to buy a new home,” he noted.
Sharing the latest figures, Lauridsen said that a record number of sales was registered in 2020.
In October, 10,045 homes were sold in Norway, which is 9.4% more than in the corresponding month in 2019.
So far this year, 87,493 homes have been sold in Norway, which is 5.5% more than at the same time in 2019.
The experts also shared a pricey yet straightforward piece of advice for aspiring house buyers.
“In general, we always say that people must buy a home in according with their finances and their needs… You seldom go wrong if you do that,” Geving said.
“Don’t try to be smarter than everybody else when it comes to timing. Buy a house you like and can afford,” Lauridsen suggested.
And in 2021?
So what’s in the store for the housing sector in Norway next year?
The experts believe the mortgage rates are probably going to stay low for a long time, and the demand will still be there.
“We expect that there will be a positive development in the housing market in 2021 as well.
“The strength of the development is difficult to predict. It depends on the supply (of new properties) and how the coronavirus will affect the economy and the job situation the next year,” Geving said.
“I believe the price development will be more moderate in 2021. The exception is the capital Oslo where prices may rise steeply in 2021 due to a too low number of new housing being built,” Lauridsen concluded.
Source: Norway Today