The development in the Norwegian housing market is now a battle between oil prices and interest rates.
Norway has long had a searing housing market . But in an oil country it any wonder if the temperature in the housing market collapses when oil prices this summer has again fallen to 50 dollars per. barrel?
But Norway is also oil country where the central bank has given us record low interest rates to counteract the repercussions of the low oil prices.
Low interest rates – and expectations that interest rates will remain low for a long time – indicate continued rising house prices.
Just as important as the direct impact is how respectively low oil prices and low interest rates affect what we think about the future. As long as most people think that prices will continue to rise, throwing more and more on the carousel.
A sad summer may be followed by a hot autumn
House prices which were released Wednesday, says us little about the net result of these forces. Admittedly it was in July for once not new top listing in housing prices, the country as a whole. But the room for random effects is large in a vacation month characterized by low turnover.
When it is more important to stick to the main picture. House prices have risen sharply over the past year – and most of the major cities, particularly in Oslo. The exception is the oil city of Stavanger.
House price figures we received yesterday, is the height to be regarded as a small question mark.
Still, the record low interest rates that turns decidedly powerfully into the private finances of most people.
The trend in rising unemployment does not change this. Unemployment increases in oil counties in western Norway, but very little when we see the country as a whole.
An unemployment rate of 4 percent, according to Statistics Norway’s figures, this means that 96 percent are in the works. Most of these jobs still perceive as safe. Lower residential rates can be read on your bank account.
No trees grow into the sky
Experience from other countries shows that the downturn of housing prices can sometimes be faster than recovery.
House prices do not move in isolation from everything else. High income means high house prices. And when housing prices rise, the property owners richer. The increased wealth may, with banks using then turned into cash. We loan on the property for so many purposes. Norwegians are world champions in “refinancing.”
Some believe that they see something that resembles a price bubble in the major cities – which eventually may collapse with a bang.
However, housing prices can not over time rise faster than people’s disposable income. Then housing expenses eventually eat up more and more of their income.
Just bubbles slams, bubbles
Some people think to see something that resembles a price bubble in the major cities – which finally collapsing with a bang. Many economists – and Finance Minister Siv Jensen is concerned.
High housing prices – financed with high debt – could make households vulnerable if times turn. Then repercussions for the entire economy will be significant.
The problem is that no one can with certainty recognize a price bubble before it is too late.
For the youth is the biggest fear that housing prices will outrun them if they do not bet bold now.
For the youth to enter the housing market is the biggest fear somewhere else: The fear that housing prices will run from them if they do not bet bold now.
Parents who want to help their children into the housing market, you look at it the same way. Admittedly remember many of their parents’ generation four or five years with sharply falling house prices around 1990. But since then, house prices have gone up and up in a quarter century.
This experience provides a tempting conclusion: Fresh investment in the housing market pays – more than almost anything else. And the gain is exempt from tax.
Reverse: To wait with purchases to one has saved up more equity, has over twenty years been a loss recipe.
We are all speculators
Actually, most of us housing speculators – without even realizing it. Even those who follow the wise counsel of letting family housing needs determine housing purchase, extend longer if they expect the good times to continue. And even parents’ readiness to help children who are going to buy housing, is usually conditional on the prices will start to decline.
When we realize that expectations of higher house prices – or lower – may be self-fulfilling.
Pessimists will someday get right. An oil price of $ 50 for several years can change a lot. But still there are those bold as that awarded in the housing market.
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