Norway’s Oct housing prices accelerate to 12% y-o-y growth

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BY: Camilla Knudsen, Terje Solsvik

OSLO: Norway’s housing prices rose to record levels in October, a real estate industry association said on Thursday, further diminishing the chance of a central bank interest rate cut.

Seasonally adjusted housing prices rose by 1.4 percent in October from the previous month, while year-on-year price growth accelerated to 12 percent from 10 percent in September.

“This is much stronger than we had anticipated,” Chief Executive Christian Dreyer of Real Estate Norway told a news conference.

Policymakers, including Norway’s central bank, the Finance Ministry and the Financial Supervisory Authority have repeatedly expressed concern over the continued rise in house prices, which has been accompanied by a steady increase in households’ debt.

In a financial stability report on Nov. 2, the central bank argued that while stricter capital demands have helped banks become more secure in recent years, the rapid rise in housing prices could have the opposite effect.

In September, Norges Bank abandoned a previous plan to slash its key policy rate from the current record low of 0.5 percent, and said growth in house prices and debt were among the reasons it changed course, even as it maintained an easing bias.

“Today’s figures are in isolation an argument for not lowering the key policy rate further. Hence, it supports out view that Norges Bank is done cutting,” brokers DNB Markets wrote in a note to clients.

On an unadjusted basis prices rose by 0.6 percent in October from September.

Norway’s crown currency strengthened following the announcement, rising to 9.05 against the euro by 1123 GMT from 9.08 just ahead of the 0900 GMT announcement.

(Editing by Stine Jacobsen)
Source: ET Reality Residential