The global finance crisis and falling oil prices haven’t put much of a damper on Norway’s residential real estate market. The national brokers’ association reports sales prices for single family homes and flats (leiligheter) are up an average 9.1 percent from May of last year.
The increase didn’t surprise the brokers themselves, and are a clear indication that low interest rates and pent-up demand are prompting Norwegians to pay more than ever for their homes. Prices in May were up 0.3 percent over April.
“The May numbers show that the price development is in line with how that month historically has been,” said Terje Buraas, chairman of the brokers’ association Eiendomsmeglerforetakenes Forbund (EFF). He was referring mostly to what he called the “small” price rise from April.
Buraas also contended that the strong year-on-year increase merely shows that “the market has normalized” after prices fell last year and the year before. Now average sales prices are 5.1 percent higher than the market peak in August 2007, and 4.5 percent higher when adjusted for inflation since then. Those numbers can be interpreted as merely showing recovery in the market, not a major jump.
He said, though, that the real estate brokers are in the midst of a “hectic” period right now, which also reflects a more normal seasonal spurt of activity before the summer holidays set in. With prices up, more homeowners are keen to sell as well.
“Buyers are finding sales objects and sellers are able to sell,” Leif Laugen of EFF told newspaper Aftenposten. “It’s a very well-functioning market right now.”
Average time on the market: 27 days
It didn’t seem quite so well-functioning earlier this spring, when newspapers reported that properties were languishing much longer on the market than is common in Norway. It now takes about four weeks for a property to sell.
A rush of properties on the market may lead prices to flatten out a bit, predict some real estate analysts. They also claim that tension in the finance markets is having an effect on buyers, despite the 9.1 percent annual price hike.
“There’s a lot of psychology in the market right now,” Steinar Juel, chief economist at Nordea Markets, told Aftenposten, adding that he thinks buyers are more careful and selective. Bjørn Egil Øye of the Prognosesenteret agreed.
“The unease in the markets is showing up in the market,” said Øye, predicting only “moderate” price rises in the months ahead.