– In Oslo, inflation got out of control. We have long warned that the mix of low policy rates, low tendering and strong demand will drive up prices and debt spirals in this market, says CEO Carl O. Geving in Norwegian Real Estate Agents.
House prices rose 1.4 percent in April compared with March, adjusted for seasonal variations, house prices up 0.6 percent. In Oslo, prices rose 2.0 percent and has risen 10.5 per cent last year, according to fresh figures from real estate Norway.
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Surprisingly strong house price inflation
– Difficult to see what is going to break the trend
– The trend of large regional differences continue, where Oslo and Hamar tops inflation. At Southwest country we see a somewhat more moderate growth overall. In Stavanger we see a flat price trend as seen in the context of the development earlier this year, indicating that the Stavanger market begins to stabilize at a new normal. It is positive, says Geving.
He notes that in the Oslo market is a crying need for more housing.
– Beyond strengthening the supply side, it is difficult to see what is going to break the trend in the Oslo market. Economic fall with strong unemployment growth may stall housing inflation, but thus far has greater Oslo area received an economic recovery as a result of the low exchange rate, said Geving.
– When the price drop again arrive … it can be properly pain
House prices
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Click to see full-screen mapSenior Economist Kjell Senneset in Prognosesenteret says that inflation in April is almost one percentage point higher than their internal estimates for April, and is now pointing towards an overall inflation this year at over five per cent on an average compared to 2015.
– Our estimate of 3.5 percent seems to be most proper, says Senneset.
Something positive by the high inflation see him anyway:
– it displays the the economy in most of Norway yesterday okay, and not least, it provides room for established families can continue to take up credit lines that can be used in stores, to artisans who are renovating our houses, and more and more expensive holiday travel, preferably in Norway, says Senneset.
Thus ensures inflation that the economy is growing more and unemployment less than it would without this growth, says Senneset.
– It does not necessarily mean we should cheer so very on housing prices, when the price drop again arrive, and it does, also in Oslo, it can be really painful. But in the short term will this inflation save some jobs, says Senneset.
– Inflation is probably not over
– This was surprising. After strong March numbers, I imagined a more moderate growth in April. But seasonally adjusted house price increase of 0.6 per cent seasonally adjusted – it is strong. So now we had two strong months in a row, says chief analyst Erik Bruce of Nordea Markets to DN.
He believes today’s housing figures illustrate how extremely twofold economy in Norway is currently:
– House prices rise sharply in the Oslo area, while they fall in Stavanger. This shows that people in large parts of the country are anxious for their own finances. When the immigration flow into Oslo is big and interest rates as well are low, as prices continue upward. We also see that people expect the prices to up – and then it happens precisely that, said Bruce.
Chief analyst believes, however, that prices will calm down eventually, since higher prices over a long time have sent housing prices up at a high level – especially in the Oslo area.
– But inflation is probably not over yet, said Erik Bruce.
Also, senior economist Marius Gonsholt Hov Handelsbanken believes house prices is stronger than expected. Meanwhile, he sees a chaotic picture:
– Oslo is the extreme variation and contributes greatly to the high average growth in real estate boom. In other areas of the country there are more moderate, and in Rogaland falling prices. But there are no quick solutions that can change the image of Oslo, for here is the demand exceeds the number of homes for sale – and thus pushed prices further upwards, says Gonsholt Hov.
– Helps to push prices up
– A boom in the housing market in eastern pulls up the average in the country, says an economist Mari O. Mamre in New analysis.
Thus adjusts New Analysis up forecasts for annual growth in Norway 5-7 percent in 2016.
– the other Eastern Norway also somewhat stronger than expected, we have revised up the forecasts for the year in and around Oslo, says Mamre.
She feels reluctant banks amplifier downturn on Southern and Western Norway.
– While loan seekers banks competing for borrowers in Oslo helping to push prices up, says Mamre.
Mamre points out that supply side of Oslo increased during April, from around 1650 objects at the start of the month to nearly 1,900 objects in late April.
– The increase is due to several existing homes on the market, it klasiske Spring Release. But the number of new homes are actually decreased during the month. But it is mainly housing over 2.5 million account for the increase in objects, and not more cheap first home dwellings, says Mamre.
She believes the competition will remain fierce in battle for the less expensive items.
CEO Christian Dreyer in Real Estate Norway points out that regional differences with Oslo and Stavanger extremes continues to intensify .
– the strong price development in the Oslo area gives cause for concern. We encourage Oslo and the surrounding municipalities to have housing at the top of the agenda. There needs to speed up the regulatory processes in order to increase the supply side, says Dreyer.
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