From now on, there will be far fewer in the typical age group of first-time home buyers. Will this bring the price of one bedroom down?
Simple market logic says yes. But the market for first-time buyers is also characterized by a psychological impact, the belief that prices will continue to rise and that ownership will pay off in the short term as well, and a number of macroeconomic conditions and our desires. I have experienced about central.
The decisive factor is the development of the category of first-time buyers among the youth. Statistics for the Norwegian population pyramid tell us that the population of 25-29 and 30-34 is much larger than all of the following five-year age cohorts.
I am surprised that this fact does not receive much attention. This may be related to the fact that drivers in the Norwegian housing debate – developers and real estate agents – have interests in having the prices of these homes rise further.
The numbers from Statistics Norway are easily accessible to everyone.
In the coming years, there will be far fewer people in the age groups who are usually first-time buyers.
Is it wise for young homebuyers to bet that the prices of one-bedroom apartments will rise in the next few years when the typical buyer group – the number of young people in this buyer segment – drops by several thousand?
If you do not expect a price increase, but are at high risk of a decrease in prices, then a very important argument for the purchase by young people of a one-room apartment completely collapses. The 23-year-old probably wouldn’t envision living in one room for the next 10 to 15 years. Many have probably bought into a much shorter time horizon – in the expectation that they will make a tax-free increase in value of perhaps 200,000 kroner a year. Something that has historically been the case often.
But if the prices of one-room apartments fell, the logic would be exactly the opposite. So you should not buy a one-room apartment with a short time horizon.
You risk paying three million for a house worth 2.8 million next year, and 2.6 million the following year. And then maybe 2.4 million. You can be limited to owning a valuable home. You can’t sell, because then your equity disappears and you don’t get a loan for your purchase.
If I wait a year or two, maybe a similar home will be available for purchase at a lower price?
What happens to a one-bedroom show when several owners in their late twenties soon start a family, and therefore each want to sell a one-bedroom apartment to buy a family apartment – and there are 20-24 fewer youngsters than before?
- Have prices gone down in the past?
Yes, in the years 1987-1993, prices fell significantly, for example in the central parts of Oslo. Many of those who bought from 1985-1987 would have lost half the value of their home if they had to sell in the early 1990s. Many of these never entered the housing market as landlords later. But it is understandable that they are reluctant to appear in the media as losers in their own homes, in an era when almost everyone is a big winner.
- Thus, these bleak experiences are not adequately communicated.
I don’t undertake to predict housing prices at all. Most people who do so lack macroeconomics experience without appearing to be discouraged from anticipating price growth. Prices are largely affected by the insanely low interest rates, which are directly affected by the economic crises and the pandemic that no one expected.
But I want to tell the guys: It’s wise to keep your head cool in the bidding rounds now. It is wise to consider alternatives. It’s wise to think long-term, and to think that the home I’m buying now should be able to live in – in the longer term two to three to four years.
It’s a scary time for young first-time buyers. And someone should feel responsible for telling that.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For more terms see here.
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