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Fast Comment NorwayPreview: Housing prices in June (due next Wednesday)

  1. Moderate uptrend in average housing prices
  2. Activity remains high
  3. Housing prices (y-o-y) running below the wage growth rate
Steady as she goes: Moderate uptrend in average housing prices
We are about to enter a rather quiet period in terms of Norwegian key data. However, the housing market never sleeps and the June statistics are due next Wednesday. The backdrop should be well known by now. Namely, that housing prices have been relatively unchanged since last summer; the trend is just modestly upward. Since July 2018, the average pace has been about +0.16 percent m-o-m, in seasonally adjusted terms. The corresponding average for Oslo has been a little weaker, at 0.1 percent m-o-m. Behind the figures we find that the general activity level has remained well in the higher end. A solid number of existing housing units have been put on the market for sale, but transaction volumes are also elevated. More importantly, the market clears without the need for significant price changes; cf. the relatively modest price trend seen over the past year, and short-term balance indicators continue to point to a further continuation of said price trend. As shown in the charts below, the balance between the number of units put up for sale and the number of actual transactions continues to indicate a monthly pace of around 0.0-0.25 percent S.A. (for Norway as a whole, as well as for Oslo). With this backdrop, we maintain our view of modest price increases this year, with the y-o-y rate for average housing prices running a bit below the wage growth rate. Note that nominal wages are growing by about 3.2-3.3 percent this year, whereas the annual change in nominal housing is currently around 1.8 percent for the national price index as a whole, and 2.1 percent for Oslo. Even if mortgage costs are rising due to the rate hike(s) by Norges Bank, the accompanying rise in overall wages are still supporting a further uptrend in household disposable incomes; hence, supporting the demand side of the housing market.


Disclaimer

Marius Gonsholt Hov

Senior Economist

Norway

maho60@handelsbanken.no

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