Heavy falls in housing construction cause Eiendom Norge director Henning Lauridsen to draw parallels with the financial crisis. Handelsbanken’s chief economist does not buy the comparison.
Henning Lauridsen, CEO of Eiendom Norge. Photo: Terje Pedersen / NTBPublished:
Less than 50 minutes ago
Updated just now
Copy linkCopy linkShare on FacebookShare on FacebookShare by emailShare by email
Far fewer new homes are being built than in the past, figures from NBBL show.
The head of Eiendom Norge is concerned and compares the situation to the financial crisis. He fears more bankruptcies, downsizing and housing price jumps.
– In the new housing market, I have no problem saying that there is a crisis, says Henning Lauridsen.
He says that during the financial crisis and the time that followed, fewer homes were built than normal. The banks did not have funds to lend.
– This led to a sharp reduction in housing construction.
Read on E24+
This is how Linn (28) doubled her rental income: – Money every month that I invest further
Offer too low
It took two to three years before construction started again. But the consequences did not come until later.
The interest rate was raised in connection with the financial crisis, and between 2014 and 2016 the interest rate was lowered by around one percentage point.
People had more money to spend, but the supply of housing was not large enough.
– The drop in interest rates caused an explosion in house prices in Norway, says the Eiendom Norge manager.
Read on E24+
These are the most expensive homes sold since August
In one year, house prices rose by around 13 per cent nationally in 2016. In Oslo, the growth was 23 per cent.
– The rule of thumb is a 10 percent price increase after a one percentage point drop in interest rates. There is something else at work here, and that is the severe supply deficit, says Lauridsen.
He clarifies that he does not think we will have as strong a house price rise now as in 2016, but still fears a similar effect.
Big differences
Chief economist Marius Gonsholt Hov at Handelsbanken tells E24 that he believes there are big differences between the period from the financial crisis to 2016, and the one we see today.
– In the past, negative surprises have been encountered in the economy by cutting interest rates and increasing fiscal stimulus. It has been possible because inflation has not been a problem, says Hov.
– Now we are in a situation where interest rates are rising sharply to overcome the high inflation. And the real economy suffers as a result.
Hov therefore believes that the clear difference from 2016 is the interest rate outlook. In the interest rate market, there is little to indicate that the central banks may cut interest rates before long, and that the interest rate level will remain higher.
– What we are in now is a completely different situation to what we experienced during the financial crisis, he states.
Read on E24+
The Sats founder gets rid of rental properties: – Doomed to lose money
He nevertheless adds that there is no doubt that the supply side of the housing market is strained, and that it will increase in the future with the low level of construction activity.
– It is clearly a relationship that will contribute to raising house prices in the future, he says.
Hov himself believes that there will be a rebound in the housing market when interest rates eventually begin to fall again, but because the interest rate level is already high, he does not expect it to be similar to that in 2016.
– Paradoxically
Lauridsen in Eiendom Norge reacts to the fact that the authorities have not taken measures to speed up housing construction.
– There are no measures in the budget to stimulate increased housing construction. This is paradoxical when we are now at full speed in the biggest crisis for housing construction since the banking crisis of 1988–92 at the same time as 1,000 new refugees a week create a need for extra housing, he said in a press release in connection with the house price figures last week.
also read
Megeler was supposed to have a viewing of seven homes – only two turned up
He mainly wants measures to stimulate more demand for housing, which he believes will give incentives to house builders to build more. One example is removing the lending regulations, which will make it easier for people to get a mortgage.
– Why do you think the government has not introduced measures?
– What I think is most likely is that people haven’t quite grasped how serious the situation is yet. I think this is related to the fact that crises in the new housing market take time before the full consequences are seen, he says.
Believes demand will result in higher prices
Handelsbanken’s chief economist says that he does not believe that increased demand will necessarily result in more housing construction.
– We do not buy the premise that more demand in a situation where the supply side is structurally rigid should lead to anything other than higher prices, he says.
Get today’s most important economic news here!
2023-11-12 10:19:14
#Eiendom #Norge #fears #effect #financial #crisis #housing #market
