Higher interest rates have had little effect: House prices in Norway have never been higher. In Oslo, prices are 0.2 per cent higher than the previous all-time high.

Many had expected a certain price drop, or at least a flattening, in line with several interest rate hikes.

But the prices of houses and apartments in Norway just keep going up.

Figures from Eiendom Norge show that house prices in this country increased by 0.8 per cent from April to May. So far this year, prices have risen by 7.7 per cent.

Since we are usually talking about prices of several million kroner, a percentage increase of 7.7 amounts to a significant amount.

NTB-Oda Ertesvåg reports further.

Housing prices continued to rise in May, but the rate of growth is somewhat weaker than in recent months, where there was also strong growth in the seasonally adjusted prices, says CEO Henning Lauridsen of Eiendom Norge.

New price peak

Even after many years of high price growth in the housing market, a new all-time high can now be noted. This despite the fact that mortgage interest rates have increased several times in the past year.

We are marginally above May last year in price and May last year was the price peak. So we are almost at a new peak, says Lauridsen.

The 12-month growth is only 0.1 per cent, but it is still an increase.

Oslo: From expensive to even more expensive

In Oslo, house prices have risen over the past six months. Adjusted for seasonal variations, Oslo prices rose by 0.4 percent in May.

Prices in the capital are now 0.2 per cent higher than the previous all-time high in August last year, according to Dagens Næringsliv.

Managing director Carl O. Geving of the Norwegian Estate Agents’ Association believes that the high Oslo prices will mean that many will struggle with financing when mortgage interest rates approach 5 per cent.

– This will probably limit price growth in Oslo in the near future. At the opposite end are Kristiansand and Stavanger, where households’ purchasing capacity suggests that prices may rise relatively more, he says.

Signs of flattening

Great growth in the number of new homes on the market in May indicates a more moderate development in the coming months.

With a normal course of business with falling prices through the autumn, we will probably end up with an increase of 3–4 per cent in 2023. This will still mean a fall in real housing prices, if the consumer price index does not come down much in the future, says Lauridsen in Eiendom Norge.

Romerike had the strongest price growth in May, where prices rose by 1.1 per cent seasonally adjusted. The weakest price development was in Bodø, with a decrease of 1 percent.

Kristiansand and Stavanger with price growth

Oslo stands out with much higher prices than others, but so far this year Kristiansand and Stavanger have seen the strongest price growth, with 12.5 and 11.8 percent respectively. While Tromsø had the weakest with an increase of 4.4 per cent.

So far this year, 43,965 homes have been put up in Norway, which is 3 percent more than in the same period in 2022.

In May, 12,869 homes were put up for sale in Norway, which is 9.9 percent more than in the same month in 2022.

At the same time, 10,297 homes were sold in Norway, which is 1.3 percent fewer than the corresponding month in 2022.

It is not only the increased interest rate that makes the price rise astound many experts. High electricity prices and generally higher living costs were expected to reduce people’s ability to invest in expensive housing.

But other factors can affect prices, namely a reduced supply side. Document has recently mentioned a decline in housing construction in this country. If there are fewer homes on the market, prices tend to rise.

However, the possible effect of reduced housing construction has come very quickly and it cannot be said with certainty that this has had an impact on the current price rise in the market yet.