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Fast Comment NorwaySharp increase in housing prices in April

  1. Housing prices up 0.9 percent (S.A.) in April
  2. Clearly on the strong side of Norges Bank's expectations
  3. We stick to our conclusion that the policy rate will be hiked in September
Housing prices up 0.9 percent (S.A.) in April; stronger than expected
According to Eiendom Norge, housing prices rose by a solid 0.9 percent m-o-m, when adjusted for normal seasonal variations. The further increase in April followed +0.2 percent in March and +0.5 percent in February. Thus we are even more certain that the trough was reached in January, when housing prices fell by a modest -0.3 percent. The y-o-y rate was -1 percent in April, up sharply from -2.2 percent in March, highlighting the overall soft moderation in housing prices throughout 2017. The price gains observed thus far have been stronger than expected by Norges Bank. On the other hand, household debt growth has been weaker than expected. But taken together, financial stability concerns may have increased somewhat. We stick to our conclusion that the key interest rate will be lifted in September, by 25 basis points. Norwegian households in general will cope well with this increase, but it will have a dampening effect on the current uptrend in the housing market.


Disclaimer

Marius Gonsholt Hov

Senior Economist

Norway

maho60@handelsbanken.no

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