Just as real estate brokers are reporting year-on-year declines of as much as 5 percent or more on the prices of homes in Norway, comes another sign that the country’s economy is shifting gears. Bankruptcies and court-ordered business dissolutions were up 15.3 percent nationwide during the first 11 months of the year.
The largest increase was in the county of Telemark in southern Norway, where bankruptcies rose 26.2 percent, reports news bureau NTB. They were up 25 percent in Hedmark County and 24.8 percent in Rogaland in western Norway. Rogaland, home to Norway’s so-called “oil capital” of Stavanger, has otherwise been developing for years into among the country’s most affluent areas and is also where home prices had been rising fastest.
Spending vs saving
On Monday, the Norwegian real estate brokers’ association Eff reported the third month in a row of housing price declines of more than 1 percent nationwide, this time from October to November. Regionally and on an annual basis, the declines were much higher, with prices down more than 5 percent in some cities like Oslo and 4-5 percent in Stavanger and Bergen.
While the declines are considered a healthy correction after years of rapidly rising home prices, they are a signal that the economy and Norwegian consumers’ willingness to spend are cooling down. Rune Bjerke, chief executive of Norway’s biggest bank, DNB, told newspaper Stavanger Aftenblad late last week that he thinks it would be healthier for the economy if households lowered savings levels and kept spending their money, not least during the upcoming Christmas shopping season that’s so important for retailers. The head of one national business owners’ association, Virke, has said the same thing even before state statistics bureau SSB reported a decline in retailing revenues for October on Tuesday.
Economist and funds manager Torgeir Høien strongly disagrees, arguing that “it’s not shopping that’s driving the economy.” Høien thinks it’s about time that Norwegians saved more and spent less, not least since debt levels in Norway have been rising throughout the past decade.
‘Don’t run amok’
“Norwegians can gladly be generous at Christmastime, but don’t run amok with your credit cards for the sake of the economy,” Høien told newspaper Aftenposten on Tuesday. He claims the economy is affected by “how much we work, how much we invest and how efficiently we manage to exploit the resources we have,” not just by shopping. “In general terms, I think folks know best how much they should spend and save.”
There was some good news on the bankruptcy front, with the level of filings down in three Norwegian counties. Finnmark in Northern Norway, which has enjoyed economic growth tied to tourism, mining and oil exploration after decades of hard times, could report improvement, with bankruptcies down 16.7 percent. The counties of Vest-Agder and Sogn og Fjordane in the south reported declines of 4.2 percent.
Meanwhile, there was one personal bankruptcy case that generated headlines on Tuesday. Newspaper Dagens Næringsliv (DN) reported that artist Marianne Aulie, perhaps best known for her large and colourful paintings of clowns splashed with champagne, has earned millions in sales revenues but faces a demand by Oslo tax officials that she be placed into bankruptcy by a court in December. Neither the local tax collector (Oslo kemnerkontor) or Aulie, 42, would comment.
newsinenglish.no/Nina Berglund
