Overall, 2023 ended with a cautious rise. It was thus the weakest year for house prices since 2017.
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House prices in Norway fell by 0.9 per cent from November to December, recent figures show Property Norway.
It is common for house prices to fall towards the end of the year, and the experts expected that to happen this time as well.
Adjusted for seasonal variations, prices rose by 0.2 per cent last month.
In 2023 as a whole, prices rose by 0.5 per cent. It is the weakest year since 2017, when house prices fell by 1.1 per cent throughout the year.
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– With a growth in consumer prices in 2023 of between 4 and 5 per cent, this means that housing has actually become cheaper, says CEO Henning Lauridsen of Eiendom Norge.
House prices have fallen throughout the autumn and into the winter. In November, the decrease was 1.3 per cent, while there was a slight rise in the seasonally adjusted prices.
In Kristiansand, prices rose the most in 2023
Among the large cities, Stavanger and Kristiansand in particular have stood out with stronger housing price growth than elsewhere. Before December, prices had risen by around 8 per cent in 2023.
This is how the regional price development looks like in December, and 2023 as a whole:
- In Oslo, prices fell 0.1 per cent in December, but were up 1.8 per cent in 2023.
- In Bergen, prices fell 1.0 per cent in December, but were up 0.7 per cent in 2023.
- In Trondheim, prices fell 0.8 per cent in December, and 1.3 per cent in 2023.
- In Stavanger and its surroundings, prices fell 2.5 per cent in December, but are up 5.3 per cent in 2023.
- In Tromsø, prices fell by 0.9 per cent in December, and by 2.9 per cent in 2023.
- In Kristiansand, prices fell 2.3 per cent in December, but were up 5.4 per cent in 2023.
It is common for house prices to fall towards the end of the year. Photo: Håkon Mosvold Larsen / NTB
Will not affect Norges Bank’s plans
– The figures show that there has been stable price development throughout the year, says Marius Gonsholt Hov at Handelsbanken to E24.
Norges Bank expected seasonally adjusted zero growth in December. It is about the same as the rise of 0.2 per cent and will therefore not affect the central bank’s plans, Hov believes.
Handelsbanken expects an overall price increase of one percent during 2024.
– The surprising interest rate increase in December is not reflected in the December figures. Therefore, we believe that we will see a weaker price development than normal in the first quarter, says Hov.
During the summer, the big bank expects that prices will stabilize and that they will start to rise during the autumn.
– House prices will not really accelerate until 2025, he says.
Nominal and seasonally adjusted housing prices
- Nominal prices tell how house prices develop from month to month in percentage. In other words, how much the average price of housing has risen or fallen in actual kroner and øre, in percentage terms.
- Seasonally adjusted prices attempt to remove effects that repeat annually, for example house prices usually rise in the spring and fall in the autumn.
- Seasonally adjusted figures can therefore give a better picture of the underlying development, and thus the figures can be compared to a greater extent from month to month.
Sea view
Interest rate jump in 2023
House prices in Norway rose in the first part of 2023, before the trend turned downward in the autumn. It is not unusual for the housing market to be strongest at the start of the year, and weaker towards the end.
In 2023, there were several new interest rate increases.
Norges Bank last raised the interest rate to 4.5 percent in December. Strong price growth and a weak krone are among the reasons why the central bank continued to raise interest rates. Many banks have followed suit by raising their mortgage interest rates.
Several economists have nevertheless been surprised by how well the housing market has held up despite the interest rate increase.
– Not abnormally large offer page
Throughout the autumn, several economists pointed out that there were many unsold homes, and that this could make it impossible to see how big the “real” price drop was because some people might have waited to sell.
In November, however, Eiendom Norge pointed out that the number of unsold homes has fallen. The trend has also continued towards the New Year.
– Throughout December, there has also been a fall in the number of unsold properties on the market, and we will not enter 2024 with an abnormally large supply side, says Lauridsen.
A total of 90,732 homes were sold in Norway in 2023, according to Eiendom Norge’s statistics. That is 0.8 percent fewer than in 2022.
103,623 homes were put up for sale last year, also 0.8 per cent less than the previous year.
– Turnover in the second-hand housing market in 2023 ended at the level of 2022 and the volumes are the same as the years before the pandemic. The pandemic years 2020 and 2021 stand out markedly with a significantly higher turnover in the second-hand housing market, says Lauridsen.
Believe in price growth in 2024
January is normally a strong month for the housing market. Experts have nevertheless predicted that the start of 2024 may be weaker than usual, given the development of interest rates and the Norwegian economy.
For 2024 as a whole, many still believe that there will be house price growth. Eiendom Norge believes that prices will rise by 4 percent this year.
– This means that this year we will also experience the so-called January effect in the housing market with a strong rise in housing prices in the first month of the year. We think it will take a lot to shake this pattern, says Lauridsen in Eiendom Norge.
DNB Eiendom expects an increase of 2–3 per cent. Norges Bank also expects housing prices to rise this year.
Handelsbanken expects “strong housing price growth”. They also estimate that prices will rise by four per cent in 2024. High wage growth, interest rate cuts and a low supply of housing are highlighted as the background for the prediction.
Norges Bank has signaled that there will only be an interest rate cut in 2024, and that it will not come until the autumn.
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2024-01-04 09:59:05
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