In 2025, house prices may soar upwards again, economists believe.
Sara Midtgaard says we are entering an abnormal period with higher interest rates over a longer period of time. Photo: Adrian NielsenPublished: Published:
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After a violent growth in the housing market for several years, also in the first half of 2023, the price trend has reversed somewhat this autumn.
Historic has make interest rates given strong house price growth, but there is less empirical evidence to draw on to what extent high interest rates over time affect price developments.
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– We believe in strong housing price growth in 2025, and that the housing market can already turn around by spring next year, even with persistently high interest rates, says senior economist Sara Midtgaard after she has given a lecture at the Housing Conference in Oslo under the auspices of Finans Norge and Eiendom Norge.
In September, house prices fell by 1.9 per cent, the second weakest September in the history of house price statistics.
Believe in recoil in 2025
Midtgaard points out that we are now entering a new normal with higher interest rates over time, and less empirical evidence on such a situation makes it more difficult for economists to predict.
– We have a theory that a tighter interest rate tightening higher interest rates that will contribute to having less money for consumption over time will have a smaller negative effect on house prices than the positive effect on house prices we saw after the financial crisis, with more expansive monetary policyexpansive monetary policyMonetary policy with low interest rates, which means that people are left with more money, she says.
At the previous interest rate meeting, Norges Bank stated that they would “probably” raise the key interest rate once more, most likely in December. In the forecasts, it was also planned to keep the interest rate at 4.50 through next year.
2023 has so far been lead-heavy when it comes to the sale of new homes and housing construction. New home sales fell 38 percent nationally in September, according to figures the housing manufacturers presented earlier in October.
This development means that several economists believe house prices will turn around.
– We believe in a rebound in 2025, that house prices will rise again, especially driven by the Oslo market, Midtgaard said at the Housing Conference.
Macroeconomist Marte Herje Strømme believes house prices will remain stable next year. Photo: Kilian Munch
I believe in flat development next year
– Since the housing market has remained so high for so long, it has clearly been less sensitive to interest rates than we had expected, says macroeconomist Marte Herje Strømme in the Prognosesenteret to E24.
She says they expect much of the same development we have had in the last two months with a further negative trend in the housing market.
Next year, the Forecast Center believes in a relatively flat house price development.
– There may probably be some positive development in the spring, as it usually does. But we think we will end up with approximately zero growth at the end of the year due to a persistently high level of interest rates, she says.
She says that the low start-up means that the supply side will be weak towards the end of next year and into 2015.
– Then we think prices will have a rebound, but dampened by a still high level of interest rates, says Strømme.
2023-10-27 20:32:22
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