– I wish others to get into the housing market. So it is in a way good that it will be cheaper, says Mia Skogstad to news. In 2020, when the housing market was red-hot, she bought an apartment NOK 300,000 above the appraised value. Since then, house prices have largely moved upwards, but nowhere near the same pace as inflation. In fact, inflation has outpaced housing price growth in the vast majority of places in Norway. Taking inflation into account, housing prices in Oslo have fallen by 5 per cent over the past three years. Photo: NTB “World champions” in debt and floating interest rates Looking only at prices in isolation, there has been an increase of 9 per cent in Norway over the past three years. Kyrre Knutsen, chief economist at SR-Bank, explains how the picture looks if inflation is taken into account. – Adjusted for inflation, house prices have fallen quite a lot. Up to 20 percent at worst. SR-Bank’s calculations show that cities such as Oslo, Trondheim and Bodø have all experienced a real decline in prices over the past three years: Stavanger and Kristiansand are the only large cities in SR-Bank’s overview which, after inflation, have seen price growth over the past three years. – Wages and general prices have grown more than the price of housing, explains Knutsen. But despite the fact that the housing market has had the brakes on in recent years, the chief economist believes it could have been much worse. Central bank governor Ida Wolden Bache has come up with interest rate increases on interest rate increases in recent years. – We went from 0 per cent in the policy rate to 4.5 per cent in just over two years. In a population that is “world champions” in both debt and floating interest rates, there should be a marked, negative turnaround in the housing market. But despite that, prices in Norway have “only” had a real price drop of 7 per cent on average. – I had believed in a more negative outcome than this, Knutsen points out. Are you worried about the price of your home? Yes, often think about it No, it’s not something I care about I don’t own a home Show result I don’t think about the price on a daily basis Mia Skogstad in Bodø bought when the market was at its peak. She had decided to study for five years in Bodø, and thought it would be worthwhile to buy. – I wanted an apartment and have no intention of selling any time soon, she says and emphasizes that the price drop is not something she thinks about on a daily basis. Skogstad says it was hard to pay 300,000 above the rate, but that the security of owning an apartment makes it worth it. Photo: Ola Helness / news Skogstad adds: – But when we sell, I will probably think more about it, but I want to believe that the market will continue to move. Knutsen at SR-Bank explains why prices in Bodø have been particularly hard hit in recent years. – One of the reasons is that there was a big price rise in Bodø a few years ago. This resulted in quite a large increase in construction activity, which in turn has meant that there have been many homes for sale over a period of time. That housing prices do not keep pace with inflation may sound scary. Knutsen reassures us that we seem to have climbed over the so-called “housing mountain”. Lower interest rates will probably make a positive contribution. The chief economist explains that the biggest crisis signal came last autumn when an increasing number of unsold homes was seen. – The so-called housing mountain. Fortunately, the number has dropped a lot since then. The housing market is more balanced now. House prices in Bodø have increased by 2 per cent in the last three years. If we factor in inflation, prices have fallen by 14 per cent. Photo: Sondre Skjelvik / news But what happens next? It will be exciting, says Knutsen. – Lower interest rates will probably help lift the housing market. But since the 1:10 rule of thumb has not had its full effect in recent years, it may be that the rise will also be more moderate. He adds that there is also reason to believe that interest rates will be higher than we had expected until 2021. In other words, it is not certain that buying a home will be good business going forward. – The old “truth” that house prices always rise is not a given either, concludes Knutsen. Published 29/08/2024, at 05.51
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Inflation leads to a fall in prices – big declines in several places – news Nordland
