– Calmed down a bit – E24

2024 started strong. Top brokers and economists expect more modest home price growth in February.

Eiendom Norge presents its house price figures for the previous month on Tuesday.

DNB Eiendom believes the housing market has stabilized after the price surge seen in January.

– There is still good momentum in the cities, but after the beginning of the year, the housing market has calmed down a bit, says Renate Sorestrand-Hansen, CEO of the big bank's real estate agency.

Hedda K. Ulvness, president of Eie eiendomsmegling, feels that things calmed down a bit in February. But he still describes the market as “healthy and balanced”.

– We are in a market that is more night and day than it was before Christmas. It was a good February with well-attended screenings. Central Oslo in particular notices a good push.

Two estate agent tops both suggest there are more stragglers on the top tier.

According to the DNB Eiendom manager, more expensive detached houses are being sold significantly less than a year ago because “higher interest rates are causing a natural drag on activity in the higher price segment”.

A warm start to the year

Home prices tend to rise at the beginning of the year, and February is no exception. However, this increase will be less than in January, which is often the strongest month of the year for house prices.

In January this year, house prices rose 3.4 percent, stronger than many experts had expected. Adjusted for seasonal variations, prices rose 0.7 percent.

This happened despite interest rates continuing to rise and mortgages becoming more expensive throughout the past year.

Norges Bank set interest rates at 4.5 percent in December and announced it would stay there for some time. Many banks followed suit by raising their mortgage interest rates. This increase affects most people by the end of February.

– About the same

Sarah Midtgaard, Handelsbanken senior economist, believes that Tuesday's figures correspond to a seasonally adjusted increase of 0.3 percent, showing a one percent house price growth in February.

Midtgaard points out that even with lower interest rates factoring into the market, the balance between homes put up for sale and homes sold is higher than it was last fall.

– Now we see that the number of unsold houses has decreased and is at a normal level, says the Handelsbanken economist.

Sørestrand-Hansen at DNB Eiendom believes that February ended “similarly” this year.

– Over the past 10 years, prices have risen by an average of 1.1 percent in nominal terms in February. This year, we seem to be slowing down a bit, with growth of about 0.7 percent — roughly representing flat seasonally adjusted price growth, Sorestrand-Hansen says.

At major bank DNB Markets brokerage, they expected February figures to show a seasonally adjusted increase of 0.2 percent. This is the image they envision for the coming months.

– January 2024 is no exception when it comes to interest rate hikes. Kjersti Haugland, Chief Economist at DNB Markets, says that we still believe that the high interest burden among households will put a damper on bidding rounds, so that underlying house price growth will continue to be weak in the first half of the year.

What will spring be like?

Ulvness i Eie says that despite the interest rate effect, he doesn't see any danger signs that indicate a downturn in the housing market beyond the spring. Megeltoppen believes this will be a more modest development going forward.

– It will be a good spring. Spring release is coming as usual and I think there will be plenty to choose from.

Ulvness also believes people are getting off the fence now that there is less uncertainty about where interest rates will be in the future.

Midtgaard points to this confidence as a key factor in the housing market. She points out that NBBL's Home Market Barometer Confidence in higher home prices and lower mortgage interest rates over a year increased further in February.

The Handelsbanken economist, however, does not expect unusually strong growth.

– Initially we thought that the growth would be more towards spring. The start of the year may be stronger than we first thought, and then the spring and summer may not be as strong as we initially thought. But we still believe in four percent growth in 2024, Midgaard concludes.

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