Norwegian house prices fall again in August, Norges Bank likely to take wait-and-see approach

Norwegian house prices dropped again in August. House prices fell 0.4 percent sequentially in the month after dropping 0.2 percent in July. The Oslo market continues to lead the downturn. Prices in Oslo fell 0.2 percent seasonally adjusted. However, also other cities recorded weak gains in August, with around flat prices in nominal terms. For August, which is usually a solid month in the housing market, this is weak, noted Nordea Bank.

The downturn in Oslo is likely to continue throughout the year before some stabilization at the start of the next year. House prices have dropped 2 percent on a seasonally adjusted basis since the top now, Oslo is down 7 percent.

“We see another 5-8 percent drop in Oslo prices, taking the total drop to 10-15 percent. However, we see limited chances for a drop in house price for the rest of the country and we expect prices to be flat or increase slightly over the coming months”, stated Nordea Bank.

The Norwegian house market is evidently softer than Norges Bank’s forecast, which is in line with 0.1 percent monthly gains. The fact that softness was more widespread in August than in the previous months might trigger concerns in Norges Bank. But the central bank might take a “wait-and-see” approach for now and that the impact on monetary policy in the short run would be limited, added Nordea Bank.

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