The chief economist says so many unsold homes make it uncertain how weak the market is now.
The penultimate piece on the 2023 home price side will arrive on Tuesday. Eiendom Norge then presents the figures for November.
The last two months before Christmas are crucial to whether we will see the first year of falling house prices in this country since 2017.
– There is no doubt whether the housing market is weak now, but the extent of its weakness is uncertain. Frank Gollum, chief economist at Danske Bank, says the housing market may have held up better than expected, even when all indicators are taken into account.
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It is common for prices to drop in November and December. If that happens this year as well, home prices could end the year in the red. Prices would need to fall by a total of 2.6 percent or more over the two months to fall below expected levels at the end of 2022.
If prices fall by as much as 3.7 percent, this will be the heaviest year for housing since the 2008 financial crisis. Admittedly, it will be one of the weakest year ends seen in the 2000s.
He was surprised
House prices in Norway rose a lot at the beginning of the year before the trend slowed in the fall, which is not unusual.
Rising interest rates and strong price growth mean that many economists and the real estate industry predicted earlier this year that house prices would fall in 2023.
Throughout the year, many experts were surprised by how the market held up, and adjusted their forecasts to believe a better development for the year as a whole.
For example, Norges Bank estimated a price decline of 0.3 percent in its previous monetary policy report for September, compared to a decline of 0.6 percent for 2023 in the previous report.
– Slightly good forecast for 2024
Although Gollum says the overall market has been better than he thought, he is not sure whether the recorded prices are representative. It’s about people who are likely to be reluctant to sell.
– Unsold homes are piling up. The decline may actually be greater than the statistics show, says the chief economist.
In addition to some waiting to sell in the current market, Gollum points out, among other things, that few new homes are being sold and that brokers are reporting few offers.
-There are things that indicate you will have a fairly weak trend in home prices until the interest rate turns. We will see weak development until 2024.
The market is becoming increasingly optimistic about a rate cut by Norges Bank in 2024. At the same time, there is uncertainty among economists and in the market about whether the central bank will raise interest rates again in December.
Others paint a similar picture of the Danske Bank economist.
Sarah Midtgaard, chief economist at Handelsbanken, recently told E24 that they believe prices will fall further in November. Meanwhile, the bank expects prices to continue to fall in January and February, before rising in the spring.
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