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Fast Comment NorwayWhat to expect for the housing market in 2019

  1. Housing prices due this Friday; we expect fairly unchanged prices in S.A terms
  2. Some near-term downside risks are present, but outlook for 2019 is moderately positive, in our view
  3. Supported by a stronger labour market; LFS unemployment expected slightly down this week
Near-term downside risks, but moderately positive outlook for 2019 as a whole
Key story: We maintain a moderately positive outlook for 2019. To recap, seasonally-adjusted housing prices have levelled out/decreased slightly over the past six months. More precisely, housing prices have decreased by an average of 0.1 percent per month since June, although that average is heavily influenced by November, when national housing prices fell by 0.5 percent. However, we urge caution about drawing inferences from the latest observation, as transaction volumes are thinner at the end of the year. For the upcoming December release, due this Friday, we expect a continuation of the recent price trend: broadly unchanged housing prices in seasonally-adjusted terms. The general impression for 2019 appears to be moderately positive, with housing prices rising by a little less than general nominal wages. Some have warned about clear downside risk to housing prices, but that is not our main scenario. Mortgage rates are expected to rise further (we maintain our call for two rate rises), but wages are rising too. Here, we expect 3.2 percent growth for 2019, following 2.7 percent in 2018. Solid growth in the real economy, feeding through into higher labour demand, coupled with increasing nominal wage growth should continue to support the housing market, in our view. Also, updated labour market figures will be released on Thursday; we expect to see LFS unemployment at 3.9 percent for the three months of September-November, slightly down from the 4 percent recorded over the past three releases. As a final comment, the outlook for the housing market is not without caveats. While fundamentals suggest a moderately positive price trend throughout 2019, sentiment may shift abruptly, although clear signs of deteriorating sentiment within the housing market have not been seen so far. Activity has remained high: recent transaction figures have been at the upper end of the interval observed over the past 10 years.


Marius Gonsholt Hov

Senior Economist


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