Norway home prices extend fall, backing central bank’s view

NORWEGIAN home prices fell for a fourth time in five months in September, backing the central bank’s outlook for renewed weakness in the residential property market.

Prices fell a seasonally adjusted 0.2 per cent last month from August, after a revised decline of 0.7 per cent the previous month, according to data published by Real Estate Norway on Wednesday (Oct 4). Norges Bank had forecast a decline of 0.4 per cent in its latest monetary policy report.

Unlike neighbouring Sweden and Denmark, Norway’s housing market had until recent months brushed off the surge in inflation and credit costs, partly helped by the government easing mortgage rules last December. Housing prices are still up 3.7 per cent for the year.

The data comes after Norway’s policymakers downgraded their forecast for residential property prices last month, projecting a full-year decline of 0.3 per cent for 2023, down from a similar-sized gain they forecast in June. Central bank officials had flagged one more quarter-point move in the key rate, most probably in December, to 4.5 per cent. 

“Higher mortgage rates and rising supply represent a continued downside risk to prices going forward, but not enough to affect the rate decisions in November and December,” Danske Bank economist Frank Jullum said. BLOOMBERG