Chief economist after the housing figures: – Significantly stronger than Norges Bank had assumed

(E24) The housing market is still doing well. But it will probably have no effect on whether there will be an interest rate hike in December or not, according to the economists.

Housing prices fell by 1.3 per cent from October to Novembershows recent figures from Eiendom Norge.

It is quite common for nominal house prices to fall in the latter part of the year. Adjusted for seasonal variations, on the other hand, prices rose slightly by 0.1 per cent last month.

– This means that the housing market remains significantly stronger than what Norges Bank had assumed, says chief economist Kari Due-Andresen at Akershus Eiendom to E24.

– A bit funny

Due-Andresen refers to the central bank’s forecast from September, which predicted that house prices would fall for the rest of the year.

– That has not been the case, with increases in both October and November.

– What do you think is the cause?

– It is a bit funny that interest rates have become so high. Until now, the changes in the lending regulations have been used as an explanation, together with extra savings. Now Norges Bank believes that these will soon be used up, so then the question is what happens, says Due-Andresen.

(Want to help us make our website better? Tell us how you experience E24!)

More pressure on the second-hand housing market

At the same time, most Norwegians still have jobs, she emphasizes.

– This means that most households have a robust economy. As the new housing market is down for the count, it may also be that more people look to the second-hand housing market.

Due-Andresen does not believe that the stronger housing numbers will be decisive for Norges Bank’s interest rate meeting on 14 December.

– Several other indicators point to the rest of the economy cooling down more than expected. In relation to the interest rate decision, I think Norges Bank will look more at inflation, the state of businesses and the labor market, she says.

Another factor that may have had an impact on the November figures is that the number of homes put up for sale was lower in both October and November this year, compared to last year.

– So it may also happen that the supply side in the second-hand housing market becomes somewhat smaller, which pulls in the direction of a stronger price trend, says the chief economist.

Still believe in interest rate break

DNB chief economist Kjersti Haugland points out that they still believe in an interest rate break from Norges Bank at the next meeting.

– It is a delicate decision, but we still believe that the odds are slightly in favor of Norges Bank not raising interest rates at the next meeting, she says.

Haugland says that this is mainly due to international conditions such as interest rates and falling oil prices, in addition to the fact that the slowdown in the Norwegian economy appears to be somewhat stronger than Norges Bank had expected.

– The house price statistics are not included in this amount of data that pulls in the direction of a break in interest rates. Viewed in isolation, it suggests that the housing market can withstand another interest rate hike, she says, but points out that it is not the case that Norges Bank wishes to raise interest rates further.

– It is more that the number in itself does not stand in the way of an interest rate increase. The housing market seems to be doing surprisingly well, despite the trend in interest rates.

Handelsbanken believes – like Haugland and DNB Markets – that central bank governor Ida Wolden Bache will keep interest rates steady next week.

They are still awaiting a final decision after the Regional Network on Thursday, says chief economist Marius Gonsholt Hov.

– There is clearly a downside risk towards the interest rate meeting. But if you look at the development that has taken place, it has been stronger than what Norges Bank had envisaged. In that sense, there is nothing in these figures that will prevent an interest rate increase, says Hov to E24.

– Better than we had expected

Hov shares Due-Andresen’s view that the numbers were stronger than expected. In advance, Handelsbanken had envisaged a nominal fall of 1.6 per cent and a seasonally adjusted fall of 0.2 per cent.

At the same time, he plays down the significance of the recent figures.

– This is highly undramatic. It is quite normal for house prices to fall at this time of year. This shows further flattening, says Hov.

– In that sense, the numbers are better than we had expected, but these numbers are close to zero. Prices are holding up well. That is the conclusion we must draw. At the same time, one is a little worried about the development in the coming months, he points out.

Norges Bank has adjusted its supervision of housing prices after prices have held up well in 2023, despite the many interest rate hikes.

– Unusual movements

He is clear that prices will fall in 2024, especially in the 1st quarter. Part of the reason for this is also the sharp increase in January this year, due to the new rules linked to the housing regulations.

The fall in housing prices was also large in the autumn of 2022.

– There have been unusual movements in recent years. When you calculate the seasonal pattern, it reads as if more falls in the autumn than before the pandemic. When we get to the start of next year, the new pattern shows that this will be stronger. We will therefore get some “payback” for that when we look into the 1st quarter of 2024.