There were signs of it already, when Norway’s national real estate association revealed its latest batch of sales statistics on Monday: Even though housing prices rose again in Oslo and Akershus, they fell in many areas of the country last month. State statistics bureau SSB thinks the latter trend will start to set in, and that the suddenly rapid rate of homebuilding will bring housing prices down by 2019.
The price rise in recent years has been dramatic: SSB (Statistics Norway) noted last week that average prices for homes within the Oslo building cooperative OBOS alone are up 27 percent this year. The real estate association Eiendom Norge noted that nationwide, sale prices were still up 11.6 percent from November of last year. They also rose the most in Oslo, up 22 percent over the last 12 months and up 1.2 percent from October.
Overall average prices fell, though, in Haugesund and Hamar, for example, down 1.2- and 1.3 percent respectively from the month before. Christian Dreyer of Eiendom Norge called that “normal” for November, while the annual price growth in Oslo and Drammen (up 15.7 percent) confirmed the trend for the region throughout 2016.
It may soon turn. Torbjørn Eika, a researcher at SSB, was quick to note that Norway is not facing a housing bubble that’s about to burst. In SSB’s latest economic report released last week, statisticians predict prices will still rise an estimated 7.2 percent next year. Price growth is expected to decline to just 1.5 percent nationwide in 2018, however, and barely 1 percent in 2019.
The reason is the sudden boom in homebuilding, which has long been sought as ameans of boosting supply and cooling off the demand that’s sent prices through the roof. News bureau NTB reported recently that housing starts were up 26 percent in October and yielded in a new record.
Figures released by the national construction association BNL (Byggenæringens Landsforening) also noted that housing starts were highest in the Oslo area, where prices have also been highest. With ground broken on 34,000 new homes in 2016, it was the highest level since at least the early 1980s.
City politicians in the Norwegian capital have long been calling for more homebuilding, since Oslo has been one of the fastest-growing cities in Europe in recent years. They’re also working on streamling the building process and allowing construction of smaller units to meet demand among young first-time buyers, students and singles who can’t afford homes at current high prices.
In addition to the price-dampening effects of more supply, SSB researchers point to only moderate expected growth in household income in the coming years, while interest rates are expected to start rising over the next three years. That would discourage prospective homebuyers from taking on too much debt.
The real estate brokers’ group, meanwhile, reported Monday that 6,949 homes were sold nationwide in November, while 10,763 were on the market at the end of the month. So far this year, sales have been concluded on 83,142 homes, down 2.9 percent from the same period in 2015.