housing prices | Expert: You should never do this when selling a home

KVADRATUREN (Nettavisen): housing prices in Norway sharply in NovemberPrices are likely to drop further in the coming months. Statistics Norway expects a price drop of more than 8 percent from the third quarter of 2022 to the third quarter of 2023.

At the same time, banks announced that they would clamp down on bridging financing, which is the temporary financing that homebuyers must have from the time they buy a new home until they sell the old one.

But more people are now selling their old homes before buying. They do this in order to obtain loans from banks, and this can push home prices down further. Meyer is clearly skeptical of this practice.

– The background is that I have seen many examples that if you first sell and then buy, you often cannot find the thing you dream about. Then you have to buy something middle of the road, and it is So She told Netavisen afterwards that many of those who bought it regretted it afterwards Eiendom Norge monthly presentation.

Expensive rent

Meyer also warns that many people have bought something that, strictly speaking, they didn’t really want. The problem is that they didn’t find anything else.

– Then they run out of time and have to hire. Often families with children are forced to rent in areas where you have to drive a lot to schools and the like. There are many downsides to selling first.

– But if the market stops and you can’t sell, you get expensive temporary financing?

There are insurance plans here, and they always tend to come in a bear market. Then you might have bought insurance that would cover your interest costs if you weren’t allowed to sell, Meyer says.

The seller pays

Soderbergh and Associates Offers what is called dual home insurance. The insurance covers actual additional housing costs of up to NOK 15,000 per month for up to nine months, if the buyer cannot sell their old home before the new home is taken over.

Insurance includes net interest costs and actual additional housing costs for unsold dwellings (group costs, housing insurance, heat/electricity, and municipal taxes).

It is valid for twelve months after acquisition and, according to Søderberg & Partners, costs NOK 6,500, regardless of the loan amount. The special thing about insurance is that it is bought and paid by the seller, but it is the buyer who will receive the payment from the insurance.

In any case, Meyer is clear that she wouldn’t have taken the chance of not having a place to live in three months.

– I’ve seen many times people say “we’ll take this here, maybe it’s a good idea”, and then regret it. You don’t feel comfortable where you are, or it just wasn’t the right place based on what you were looking for

Homebuyers then take the risk of buying and selling again. Many sellers risk renting for a long time, which in Oslo now costs between 15,000 and 18,000 NOK per month.

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Exception: disaster

Does the buy first advice apply regardless of whether the market is going up or down?

– Yes, unless there is a complete market disaster or you are in a very special situation. If not, I would always buy first. Even during the financial crisis of 2008 and 2009, we saw that.

There is no significant difference whether there are booms or busts. The fact that banks are now putting a little emphasis on intermediary financing is very unfortunate.

Meyer believes that the drop in home prices this fall is normal after the recovery we have seen during the pandemic and more recently. The period from spring 2020 to the beginning of 2022 was marked by an exceptionally low interest rate.

The interest rate is moving up, but still to the perfectly normal and acceptable level that we had in the past. can be operated. But there’s so much uncertainty at the top that it makes you a little wary, she says.

Very optimistic

In a bear market like now, it’s all about pricing homes right. Many home sellers may have very high price expectations based on prices achieved a few months ago.

– Our brokers say that during previous boom times you have a price range to stay in. Then they are often priced a bit near the top of the price range. Now they say it pays to settle for a little less than you can accept. Then you get more stakeholders in.

We are still at the beginning of the downturn in the housing market, Handelsbanken wrote in the morning report on Monday. The main reason behind this is the rise in interest rates, the increase in interest rates that have not had their full impact in the market. Meyer is no different.

– I think we will see more decline in the first quarter of next year. We are likely to see a further decline of 6-8 percent after the November figures.

Then the market stops

Are you generally concerned about developments in the housing market?

– Yes, and what I’m afraid of is finance. The most dangerous and important thing for us is that banks stop intermediary financing. Then the housing market stalls, Meyer warns again.

What they’re going through, she says, isn’t necessarily that people can’t afford the increased interest rates. Interest rates remain at a fairly acceptable level, but the uncertainty is greater than usual. Therefore, many choose to sit on the fence.

lending regulations Been out for a consultation this fall. As usual, the Norwegian Financial Supervisory Authority wants to take austerity measuresThey, so to speak, are alone.

– I think that at least the government is not tightening. And then I think the Bank of Norway will have to look at the interest rate if the housing market continues to go down. Meyer has said before that they should also look at financial stability The changes became known on December 9.

According to the regulations, banks had to take into account an interest rate increase of at least 5 percentage points when assessing customer serviceability. This requirement is now being changed so that from January 1, 2023 banks have to bear an interest rate increase of at least 3 percentage points. In any case, banks must use an interest rate of at least 7 percent as a basis when evaluating serviceability.

Since 2017, there have been stricter loan-to-value ratio requirements for loans with a mortgage on a secondary home in Oslo. This requirement will be removed from January 1, 2023. The general requirement of a maximum loan-to-value ratio of 85 percent will also apply to these loans.