New figures released by Norway’s national real estate brokers’ association on Wednesday show prices declining and even diving in some areas. Average prices in Oslo, for example, fell for the fifth month in a row and are now 8.4 percent lower than in April.
“We have to go back to the finance crisis (in 2008-2009) to find such a major decline in price growth over a 12-month period, and it’s especially strong in Oslo,” Christian Dreyer, chief executive of the brokers’ association Eiendom Norge, said at a presentation of the latest numbers Wednesday morning.
Dreyer noted that given the huge price increases in Oslo from 2015 to 2016 (as much as 24 percent), it’s “not unnatural” that the current decline is also strong. “Housing price growth was the strongest here (in Oslo),” Dreyer said. Investors have since left the market, following tighter lending restrictions, and there’s also been a building boom that’s altering the supply-demand ratio in the capital.
Housing prices in Oslo fell 1 percent from August to September. On a nationwide basis, prices were down 1.6 percent. Bergen logged the biggest monthly price decline among Norwegian cities, down 1.6 percent as well. Stavanger prices held up better, down just 0.2 percent, while Trondheim was down 1.1 percent. Declining demand and new housing units added to the market also means that it now takes twice as long to sell a home in Oslo as it did in September of last year, from 13 to 27 days on average.
Prices in Oslo are arguably still high, and up an average 0.9 percent over September 2016. All appreciation logged towards the end of last year and earlier this year, however, has been wiped out. Homes in Oslo were on average selling for 9.1 percent over appraisal in January. Now they’re selling for 0.6 percent under appraisal.
Lots of uncertainty
It all suggests that the boom is over, the red-hot real estate market has cooled off and become more rational. Uncertainty, meanwhile, is higher than it’s been for a long time. Dreyer noted that population growth has declined in Norway following the downturn in the oil industry that once attracted lots of job seekers from abroad. “There’s a lot of uncertainty tied to whether the downward trend in population growth that we’ve seen so far in 2017 will continue,” he said.
He described real estate sales overall as “relatively stable” despite the price decline. “One positive effect of the increased supply on offer is that buyers in the biggest cities now have more time to make their decisions,” Dreyer said. The time it takes to sell homes also varies widely around the country. While it now takes nearly a month to sell a home in Oslo, it takes just 16 days in Drammen and 17 days in Moss and Hamar, three cities that all are becoming increasingly attractive for commuters to Oslo and still viewed as more affordable.
It now takes longest to sell a home in the county of Vest-Agder outside Kristiansand, with homes languishing on the market for an average 125 days. The area was hard-hit by the oil price decline and economic downturn, and lately has been hit by severe flooding as well.