State financial authorities at Finanstilsynet report that housing prices are likely to keep falling through 2018 before they start rising again. Prices have fallen more than 10 percent in Oslo since April.
“This is a natural chill in the market after the strong price growth we had last year,” said Morten Baltzersen, director of Finanstilsynet, during his presentation of its November report. He pointed to how prices have been “extremely high” in Norway, also in terms of average incomes.
“From our point of view, it’s a desirable development that housing prices now stabilize after a correction from a high level,” Baltzersen said. He wouldn’t rule out further price declines over the next year.
He pointed to stricter lending rules that took effect from January 1st. The number of lenders under the age of 30 with mortgages that exceed five times gross income has fallen from more than 17 percent of the market last year to 5.6 percent this year. He said that Norwegian households still have a high level of debt growth, however, “and that’s cause for concern.” Average household debt in Norway is now at a record-high 222 percent of disposable household income.