House prices jumped 1.4 percent higher in March from February’s levels, and are now 0.3 percent higher than at the same time last year. The increase smashed through analysts’ projections, and they now believe nervous buyers are now “off the fence.”
Seasonally adjusted, prices rose by 0.7 percent reported newspaper Dagens Næringsliv (DN). Kjell Senneset, the chief economist at construction market analyst firm Prognosesenteret said he’d expected a more modest rise of 0.5 percent in March.
“They were way too high,” said Senneset. “They busted our predictions. We had predicted roughly no growth in 2014, but we probably have to change the projections dramatically. We’ll wait a month more and see the price development then.”
The leap is far from last autumn’s market woes, when house prices dropped sharply. “The finance situation was probably what contributed most to the fall,” said Senneset. “It became tougher both for young and old to get home loans and the banks made it harder to get interim financing. This led to many selling their homes, and then sat on the fence to wait before buying again. In addition there was a lot of negative psychology involved.”
“What we see now is a correction,” Christian Vammervold Dreyer from the Real Estate Firms Association (Eiendomsmeglerforetakenes Forening, EFF) told DN. “Because the price decline we saw last year was a little artificial.”
Dreyer agreed buyers’ moods had shifted, and while he too was surprised by the sharp increase in March he predicted prices had now already peaked for the year. “The majority of the price growth has now leveled out,” he said. “The start of the year has been very strong, much stronger than anyone had imagined beforehand.”