The Norwegian housing market continues to experience a nominal decline, according to the November housing price statistics from Eiendom Norge. However, the statistics show a slight increase in housing prices when considering seasonal variations. The housing market remains remarkably stable, despite the policy rate being at its highest level since the 2008 financial crisis. Although several chief economists express surprise at the state of the housing market, they anticipate a weak price development in the near future.
According to the housing price statistics, housing prices fell by 1.3 percent in November 2023. Adjusted for seasonal variations, there was a slight increase of 0.1 percent. At the end of November, the average home in Norway cost 4.319 million NOK, compared to 4.37 million NOK at the end of October.
Last month, Eiendom Norge pointed out that the published and upcoming seasonally adjusted figures could be somewhat misleading due to unusually substantial price fluctuations in 2022.
- Similar to recent months, seasonality is still influenced by the especially weak development in the fall of 2022. Looking at November in previous years, the development is weak despite the small increase, says CEO Henning Lauridsen of Eiendom Norge in a press release on December 3.
From the beginning of 2023 until May, housing prices increased every month, reaching a peak of 7.7 percent. The strong development in the first half of the year has so far been offset by the weak development since the summer. Housing prices have risen by 1.3 percent in 2023.
The price development in November has surprised several chief economists and real estate leaders. In advance, banks such as DNB Markets and Handelsbanken expected a decline in the seasonally adjusted housing prices last month.
Chief economist Frank Jullum at Danske Bank expresses surprise at the price development in October and November, especially considering the simultaneous increase in interest rates. Despite a decrease in the number of unsold homes last month, he points to a significant increase over time.
- It is clear that this is an indication that the actual development is weaker than the price figures suggest. It is a small indication that the underlying price picture is weaker, he says.
Similarly, Harald Magnus Andreassen, chief economist at Sparebank 1 Markets, believes that the development is remarkable, considering the high number of unsold homes. Baard Schumann, CEO of Selvaag Bolig, who now leads a housing development fund at Union, also expresses:
- This holds surprisingly strong. A price fall of 1.3 percent is not much, and if you get a similar decline in December, we are at zero for the year. I thought the interest rate would hit harder than that, he says.
To explain the price development in the last two months, chief economist Kari Due-Andresen at Akershus Eiendom points to changes in lending regulations and extra savings. Carl O. Geving and Baard Schumann also mention that one of the reasons could be that the new housing market is down with a broken back.
After November's statistics, the CEO of Eiendom Norge highlights that the second-hand housing market is robust.
- There have been slightly fewer homes sold than in November last year, but overall, in 2023, we are almost at the same level as last year. The existing home market is functioning well, despite the weak price development since August and lower real estate prices, says Lauridsen.
Similarly, CEO Carl O. Geving of the Norwegian Real Estate Agents Association states that the existing home market appears robust, and he considers the challenges in the housing market to be "strongly exaggerated." He points out that the turnaround time is currently lower than in 2019.
The average sales time for homes in Norway increased from 41 days in October to 49 days in November. For comparison, the sales time in November 2019 was 53 days. Stavanger and its surroundings had the shortest sales time, at 30 days, while Hamar and Stange had the longest sales time, at 96 days.
- In November 2023, 6,683 homes were sold in Norway, a decrease of 8.7 percent compared to the same month in 2022.
- So far in 2023, 87,714 homes have been sold in Norway, which is 0.8 percent fewer than in the same period last year.
- In November, 6,164 homes were listed for sale in Norway, a decrease of 16.8 percent compared to the same month in 2022.
- So far this year, 100,424 homes have been listed for sale in Norway, which is 0.9 percent more than in the same period last year.
Eiendom Norge's CEO indicates that there is still good activity in the existing home market, despite the shift in price development over the last three months. He also notes that the high number of unsold homes in the previous month has fallen significantly through November. Much attention has been focused on the extremely high number of unsold homes in the market in recent months. In October, there were 19,944 unsold existing homes, the highest number in the history of the statistics dating back to January 2009. After November, the number of unsold existing homes is 17,500. Although the supply has decreased, there has not been a higher number of unsold existing homes in a November month.
In November, Stavanger and its surroundings had the strongest seasonally adjusted price growth with an increase of 2.2 percent. Kristiansand also had one of the strongest developments in November, with housing prices rising by 1.9 percent, adjusted for seasonal variations. These two areas have also been ahead of the curve in 2023, with price increases of 8 and 7.9 percent, respectively.
- Housing price development in Stavanger and Kristiansand still significantly stands out from the rest of the country, and we expect these cities to continue standing out by the end of 2023. In the rest of Norway, the picture is different, and most areas will end up around plus or minus zero by the end of the year, says Lauridsen.
On the other hand, Romerike had the weakest seasonally adjusted development in November, with prices falling by 1.7 percent. So far this year, Bodø with Fauske has had the weakest development, with a decline of 2.3 percent.
In Oslo, housing prices decreased by 1 percent in November. Adjusted for seasonal variations, housing prices in Oslo increased by 0.3 percent. So far this year, there has been an increase of 2 percent in Oslo's housing prices. At the end of last month, the average price for a home in Oslo was 6.395 million NOK.
In the coming time, experts expect housing prices to continue falling.
Eiendom Norge's CEO expresses concern and emphasizes the need for measures to improve the situation in the housing market:
- We also expect weak development in housing prices in December, but the big question is how January 2024 will turn out. January is known as the month with the greatest price growth during the year. If the Central Bank cancels the interest rate increase in December and Finance Minister Trygve Magnus Slagsvold Vedum (Sp) takes action on lending regulations, next year could be better for the housing market and the new housing market than it appears now, says Lauridsen.
Senior economist Sara Midtgaard at Handelsbanken expects housing prices to continue to decline. She suggests that there will be a significant price fall, adjusted for seasonal variations, in January, noticeably larger than what we have seen earlier this fall. However, she believes in a price increase come spring.
NEF's CEO Geving, however, points out challenges in the capital:
- Oslo will be particularly exposed to a shortage of supply and price pressure in the housing market. The situation here is that there is a shortage of both primary homes and rental properties. Under the mentioned circumstances, it could trigger a new strong price increase, as we have seen several times during economic downturns, he says.
Sources: Eiendom Norge, DN(1), DN(2), DN(3), E24
