Commodity prices are rising. For many, it is now beginning to hurt. The developer company Nordbolig pulls 77 homes from the market. They are postponing another 30 due to rising material prices. – It has been with us for a year and a half with the production of homes, says Katrine Aalstad in Nordbolig. In the morning, Statistics Norway (SSB) came out with recent figures showing that prices in May were 5.7 per cent higher than last year. – The Norwegian economy is in a new phase. There is war and a lot of other challenges. I think many will find the CPI figure somewhat surprising. It is a historic high, says director of Statistics Norway, Geir Axelsen. Consumer Price Index (CPI) Shows changes in the prices of goods and services purchased by households, compared with a base year. The goods and services that make up most of the household budget are given the greatest weight. To see how the price of a product group develops, it is often weighted against the consumer price index, but with a value based on how large a part of the expenses the product group in question constitutes. Read more about weighting at Statistics Norway. Statistics Norway calculates the consumer price index. Without the electricity subsidy, the figure would have been 7.7 percent, says Thomas von Brasch in Statistics Norway. This is the highest price growth over twelve months that Statistics Norway has measured since December 1988. Nordbolig has been forced to price up homes because the costs of materials have become too high. They are struggling to sell homes. – For lumber, which is one of the main input factors with us, it is up to 60 percent in just over a year. We can not bear that loss alone, says Aalstad. Expect double interest rate hike Core inflation is also rising. For May, core inflation is up to 3.4 per cent. Core inflation is adjusted for electricity prices and fuel prices. UP: Interest rates must go up, says Thomas von Brasch, researcher at Statistics Norway. Photo: Håkon Mosvold Larsen / NTB scanpix – The interest rate must rise. Unemployment is at a record low, and inflation is at a record high, says Thomas von Brasch at Statistics Norway. The Norwegian economy is heading into a boom. This indicates a rapid rise in interest rates in the time ahead. Together with subdued prospects internationally, this will slow down growth in Norway, Statistics Norway writes. Brasch believes that the interest rate will be as Norges Bank has said. There will be eight increases in interest rates in 2023. He believes they will happen faster than announced. – Norges Bank will probably raise the interest rate by 0.5 per cent in June. It will probably continue to be raised to 2.5 percent next year. Inflation is now estimated at 4.7 per cent for the year as a whole. An upward adjustment of 1.4 percentage points from what Statistics Norway predicted in March. – The economy is boiling Norges Bank has announced a new interest rate hike from the current level of 0.75 per cent. Norges Bank will issue a new interest rate decision on 23 June. – As we now assess the outlook and the risk picture, the key policy rate will most likely be raised in June, said Governor Ida Wolden Bache in May. Elisabeth Holvik, chief economist at Sparebank1, believes that the central bank is more cautious than necessary. – It’s boiling in the economy now. We need something that dampens activity. The interest rate should be raised by half a percentage point, Holvik believes, the bank can rather take a break and see what effect it has on the krone exchange rate and the housing market. – Then they show that they take the inflationary pressure seriously, she says to news. – What does the next year look like for consumers? – One must take into account that prices will continue to rise, that interest rates on mortgages will increase, and that interest rate increases will create turbulence in the stock market. Growth in real wages will pick up Statistics Norway says that Norwegians will have a decline in real wages this year, It is still not just negative news for Norwegians, according to von Brasch. – Real wage growth will pick up in the years to come, the researcher says. Real wages are the amount of goods and services a wage earner can buy for his wages. CPI: Shows changes in the prices of goods and services purchased by households. Photo: Rahand Bazaz / news The real estate price will probably fall With this picture, a normal mortgage rate will rise from around 2 per cent in 2021 to around 4 per cent in 2025, von Brasch states. – Overall, house price growth is estimated at 5.8 per cent this year. This estimate means that house prices will increase by 1 percent throughout the rest of the year, says Thomas von Brasch. There will probably be moderate house price growth in the years ahead. In 2021, house prices increased on an annual basis by as much as 10.5 per cent, but the growth rate was declining throughout the year. – Increased supply of housing in combination with higher interest rates contributes to curbing house price growth, so that real house prices will probably fall slightly in the years to come, says Thomas von Brasch. HOUSING: Statistics Norway estimates that house prices will increase by 1 per cent throughout the rest of the year Photo: Simon Skjelvik Brandseth / news Inflation may have reached its peak There are several factors that indicate that the inflation wave is about to reverse. That is what Statistics Norway researcher Roger Hammersland says. – If we look at the expectations for inflation in five years’ time, it is close to the level from February 2021. Just before inflation began to rise in earnest. Commodity prices rose after the Russian invasion of Ukraine. In fact, the prices of energy products actually continue to rise. The same is not the case for some industrial raw materials and precious metals. – In addition, high cost of living combined with a change in monetary policy will help to dampen demand in the time to come, Hammersland says.
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Developer must withdraw 77 homes from the market – news Norway – Overview of news from different parts of the country
