-We are terrified – E24

Statistics Norway estimates a sharp decline in investment in housing next year, and believes this could lead to lower interest rates. – He fell like a stone, says the company director about the state of the industry.

When the calendar showed January 2023, Oddvar Haugen Hamar’s Nordbolig company had 42 employees. After just a few months, the number of employees was cut in half.

– We had layoffs this year, we resigned this year and we have more layoff notices – and we have a complete stop in our production for two months before we start a new project under our care, he tells E24.

In fresh a report Statistics Norway notes that rising interest rates and rising costs have had a severe impact on housing investment. It’s something Hogan and the rest of the Nordpollig knew firsthand.

We witnessed a slight recovery after Corona, then the market fell like a stone after prices rose. We saw this a year and a half ago. “That’s when we started to feel it and scream a little bit,” Haugen says.

NHO member companies are also taking an increasingly gloomy view of the market situation, according to a recent study. The construction industry, the automobile industry and the tourism industry end up at the bottom, with the worst assessment of the situation.

Get today’s most important economic news here!

Difficult rises in interest rates

In the first nine months of this year, investment in housing was historically low, falling by almost 20 percent, according to Statistics Norway. Such a significant decline has not been recorded in numbers dating back to 1978.

And the fall will be able to continue:

We expect investment in housing to decline by more than 30 percent overall this year and next. This contributes to a further slowdown in the Norwegian economy in the future, Thomas von Brasch, head of research at Statistics Norway, says in the report.

Haugen says the construction industry has already pointed out the problems that could arise if the necessary measures are not taken.

– What happened instead was that interest rates rose – and rose and rose – which only reinforced them. It’s something that’s been going on for a long time, as we’ve seen in the industry, Haugen says.

– How do you see next year?

– We are terrified that we will have a central bank governor who stands up and says that there are still chances for increases, regardless of what they do in December. “If she says the interest rate will continue to rise, we are postponing the problem further for a long time,” he says.

In the report, Statistics Norway expects interest rates to peak, which it explains by “the sudden halt in housing construction and weak growth prospects, coupled with lower interest rates and inflation with our trading partners.”

The key interest rate is currently 4.25 percent, and it is not known whether there will be another rate hike next week. Within two years, the interest rate was raised from 0 to the current level.

The reason for raising interest rates is to discourage activity in the Norwegian economy in order to overcome the sharp rise in prices.

You want predictability

Haugen says they would prefer a rate hike in December and then a message that the interest rate has peaked, which gives more predictability.

– It’s a better signal to us than the opposite, which is that we may have to wait until January or February.

The businessman says the interior is needed, but many people want to sell before buying.

– In order to start again, people must know that we are at the top to invest again. Nobody buys a house.