October 5, 2022

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This can happen in house prices

This can happen in house prices

– Many people will have tight finances, after Thursday’s interest rate meeting, the central bank’s governor repeated almost to the point of boredom.

Nevertheless, Ida Woltenbache believes that most people will tolerate higher interest rates, especially because of the very low unemployment rate.

However, it was not without reason that Norges Bank increased the policy rate by half a percentage point on Thursday. The rise in prices – 6.8 per cent in the past year – should moderate, meaning our consumption should fall. This also applies to house prices.

Inserts a warning

– The latest projections show a small drop in house prices, but it won’t be huge. This is due to low unemployment, and we expect households to have a more spacious economy, Wolden Bache tells NTB.

However, she adds a small caveat:

– There is a risk of a more powerful dampener.

This will be a very difficult assessment for Norges Bank, which the governor of the central bank himself has emphasized several times in recent months: price growth must slow down, while the handbrake on the Norwegian economy must not be pulled.

May add to the problems

Although inflation in the US is showing some signs of slowing, global inflation remains high. The usual response to that is to tighten monetary policy – ​​but if that doesn’t work, it will only make the problems worse.

– High price growth and tighter monetary policy could reduce demand and activity, says Volden Bache.

Good inflation figures from the US (8.5 percent in July and 9.1 percent in June) are still uncertain, says Fed governor. In many countries, high inflation is based on commodity price growth across the spectrum, although energy prices and food prices have received more attention.

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– That can contribute to high prices in the long run.

(© NTB)