House prices rose 1.2 per cent in April – E24

The increase in housing prices has been “strong as hell” so far this year, Eiendom Norge believes.

House prices rose by 1.2 per cent in April from the previous month, Eiendom Norge’s statistics show.

Adjusted for seasonal variations, prices were up 0.7 per cent.

– There is a sharp increase in the nominal house prices in the first four months of the year, but it is worth noting that the house prices adjusted for inflation do not have a corresponding growth, says CEO Henning Lauridsen of Eiendom Norge.

It is common for house prices to rise at the start of the year, and 2024 has been no exception. There was an increase in both January and February, before prices rose 0.9 per cent in March.

So far this year, house prices in this country have risen by 7.2 per cent.

– If anything, this gives Norges Bank good cards in hand to delay interest rate cuts. That does not prevent Norges Bank from postponing interest rate cuts until December, says senior economist Sara Midtgaard at Handelsbanken to E24 about the April figures.

April usually offers a price increase. The month is often characterized by the so-called spring release, which usually means that many homes are put up for sale in the spring.

– A large number of homes were both sold and advertised in April, and we had a real spring flood in the housing market in April, says Lauridsen.

Price jumps in many places

The arrows pointed upwards for housing prices in many parts of Norway last month.

In Oslo, prices rose by 1.3 per cent, and there was also a seasonally adjusted increase. The same picture emerges for other big cities around the country in April.

• Bergen: Up 1.5 percent
• Trondheim: Up 0.7 per cent
• Stavanger and surroundings: Up 1.6 per cent
• Kristiansand and surroundings: Up 2.4 per cent
• Tromsø: Up 1.4 per cent

So far this year, there has been a strong rise in house prices in all areas, according to Eiendom Norge. The average price for a home in Norway was NOK 4,763,894 at the end of April.

– Bergen, Stavanger and Ålesund stand out with particularly strong development, says Lauridsen.

Optimism

The housing market has been stronger at the start of 2024 than many experts had foreseen. This despite the fact that interest rates were raised throughout last year, and mortgages became more and more expensive.

Increased optimism has been highlighted as an important reason. Since the new year, more and more people have come to believe in higher house prices a year ahead, shows NBBL’s house price barometer. At the same time, more people believe in lower mortgage interest rates in a year’s time.

Low new home sales and fewer unsold homes are pointed to as other factors affecting the second-hand market.

The interest rate at rest “for quite a while”

Signals from Norges Bank that the interest rate peak has been reached are highlighted as the background for housing optimism.

The interest rate was set at 4.5 per cent in December last year. The central bank has since said that the interest rate will probably be kept there “for quite some time to come”, until the autumn of this year.

In March central bank governor Ida Wolden Bache said that the most likely rate cut is in September, but at the interest rate meeting last week the central bank believed that there may be a need to keep interest rates up somewhat longer than they had previously envisaged.

Norges Bank expected a seasonally adjusted rise of 0.4 per cent for house prices in April.

At the same time, unemployment is still low in this country, and with a front-line occupation settlement of 5.2 per cent, wage growth of over five per cent is likely for the second year in a row.

– With a good salary settlement both last year and this year, it is not unnatural that house prices adapt to this improvement in purchasing power. Our assessment is that this, in combination with declining completion of new homes, is what explains much of the strong development now, says Lauridsen in Eiendom Norge.

Before the weekend, statistics were published which showed that Obos prices in Oslo fell by 0.6 per cent in April.