– Prices tend to fall in December, but they fell much more than normal in December last year, says chief economist Sissel Monsvold on Obos in a Press release.
On average, prices in Oslo have fallen by 0.7% in December over the past decade, according to Obos. The housing market is therefore cooling down further after several months of decline.
The year-end drop nullified the strong recovery in Oslo with which 2022 had opened. In the last twelve months, prices decreased by 1.6 percent, while on a national basis prices remained unchanged compared to December last year year.
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I think the new lending rules will cushion the fall
Broker industry organization Eiendom Norge will release December data next Wednesday.
Obos’ figures represent around a quarter of homes sold in the capital and a much smaller percentage nationwide. Obos believes its own figures are weaker than Eiendom Norge’s figures.
– The figures need to be interpreted with caution because fewer houses have been sold than usual, says Monsvold.
DNBs believes data from Eiendom Norge will show prices fell 2% in December.
– It is mainly the marked increase in interest rates that has led to the marked negative trend reversal in prices, says chief economist Kjersti Haugland.
Official rate as a percentage
The official rate is set eight times a year by Norges Bank. The policy interest rate governs interest rates in banks and affects housing costs. The purpose of raising the interest rate is for high prices to fall again.
The forecast tells us how Norges Bank thinks interest rates will develop in the future.
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A higher interest rate means more expenses if you have a mortgage
Most economists believe that 2023 will bring a slowdown in the real estate sector.
Obos believes that prices will fall by 2-3% in Norway this year, but the price decline will be moderated by the fact that the government made it a little easier to get a mortgage.
– We assume that much of the price decline was eliminated during last year’s weak autumn. [ …] The changes to the requirements for functionality in the lending regulation as of January 1 this year will cushion the price decline somewhat. So does higher wage growth and higher net immigration. At the same time, we want to emphasize that the uncertainty is great, says Monsvold.
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See peak interest rates in March
Higher interest rates and steep price growth mean people’s housing budgets are shrinking, while the bank will lend less to buy a home.
The key interest rate is 2.75% after a rapid increase over the past year and a half. Norges Bank announced a further interest rate hike in early 2023, after which most people will receive a mortgage interest rate above 4%.
– Interest rates will likely peak in March, and by then we also believe the decline in home prices is over, so prices will pick up again, albeit moderately. Tight supply, particularly in central areas, is an important reason why we believe the potential for a steep decline in home prices is limited, Haugland says.
