Housing prices have tumbled again on a monthly basis, and are now just 2.4 percent higher than they were at this time last year. It’s also taking longer for homes to sell, leading real estate analysts to believe that the market is cooling down.
That’s actually been a political goal, after years of ever-rising prices that have led to severe affordability problems for first-time buyers. It’s almost impossible for young adults to buy a home in Oslo or Norway’s other cities without assistance from parents or grandparents, even when they’re earning solid salaries.
Now a rising supply of new housing units on the market combined with a slight rise in interest rates and stricter capital requirements seem to be having an effect. The housing association OBOS that ranks among Norway’s largest residential developers reported a decline in prices in Oslo in October, down 2.8 percent from the month before. That surprised OBOS’ own economists after five straight months of price rises.
Prices were down 3.7 percent from September on a nationwide basis, and OBOS chief economist Sissel Monsvold called the declines “suprisingly large.” Prices have nonetheless risen 3.1 percent so far this year, but that’s far below the residential real estate appreciation of recent years.
‘Lots on offer’
“One reason can be that there’s a lot of housing on offer and buyers have a lot to choose from,” Monsvold stated in a press release from OBOS. “It can also be that four increases in interest rates are beginning to be noticed.”
On Tuesday the national real estate brokers’ association Eiendom Norge reported that prices sank 0.8 percent from September to October and were up just 2.4 percent over last October. The association’s numbers are based on sales reports from broker members, the Finn electronic real estate advertising platform and the organization Eiendomsverdi.
“Moderate price development continued in October,” noted the chief executive of Eiendom Norge, Christian Dreyer. “We expect that housing prices will fall over the next few months.” He noted, however, that declines are “normal” in the last quarter of the year.
Longer time on the market
A total of 9,184 housing units were sold in Norway last month, 1.7 percent more than in October 2018. Sales are up 3.4 percent since January but it’s taking longer to sell residential property. Eiendom Norge reported an average of 47 days on a nationwide basis. The fastest sales occurred in Oslo, at 25 days, while sales were slowest in Kristiansand and the country’s oil capital of Stavanger, at 72 days. That’s a big change from the hot real estate market when the oil industry was booming.
Hedda K Ulvness, chief executive of the Eie real estate brokerage in Oslo, told newspaper Dagens Næringsliv (DN) that “the tempo is lower” and activity has declined. She also noted that it’s “normal” for prices to fall in the autumn.
“But now we’re seeing a shift in the market,” Ulvness said. She thinks prices may continue to decline.
“I don’t think we’ll see any dramatic price decline,” she told DN, “but I think prices will go down and that we’ll have a quiet end of the year.”