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Fast Comment NorwayPreview: Housing prices in September

  1. Housing prices somewhat weaker than anticipated by NB so far
  2. But the monthly trajectory ahead is little changed
  3. Moderately positive outlook
Moderate housing price growth
Next Wednesday we will see figures for housing prices in September. As shown in the chart below, developments through the summer months were slightly weaker than Norges Bank had anticipated; Norges Bank had anticipated growth to hover around 0.3-0.4 percent in June and July (m-o-m, S.A.) before slowing to 0.3 percent in August, but the actual outcome averaged around 0.1 percent. Owing to the weaker monthly performance, Norges Bank lowered its estimates for the annual growth rates in its September Monetary Policy Report. Looking ahead, however, the monthly trajectory is little changed (see chart below). The interpretation is that the expected moderation in housing price growth happened a bit sooner than Norges Bank previously expected. For September, Norges Bank now expects a seasonally-adjusted monthly change of 0.1 percent, vs. the corresponding estimate of 0.2 percent in the June report . But throughout the final quarter of the year, the monthly change is still expected to stay in the interval of 0.1-0.2 percent. All told, Norges Bank sticks to its assessment of a moderately positive outlook for the housing market; a view which we share. The reasons for a more moderate price outlook relative to past standards should be well known: the supply side is increasing with rising completions, whereas the demand side is dampened by lower population growth and some higher mortgage rates. But wage growth is rising too, and the net effect should still be marginally positive for housing prices; something which is also reflected in the forecasts. A final reminder: the monthly data is quite volatile, even when taking seasonal factors into account. We will thus continue to smooth through the monthly fluctuations when assessing the state of the housing market. And, as always, it is important in this regard to keep an eye on the monthly balance between additional units put up for sale, and actual transactions.


Marius Gonsholt Hov

Senior Economist


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