The Briton was shocked when he went to a movie show in Norway

Norway has one of the most exposed housing markets in the world, according to The Economist this summer.

The popular news magazine analyzed housing markets around the world and concluded that Norway, along with Denmark, Sweden, Australia and Canada, are the countries least prepared for a record rate hike.

I went to a show in Norway

When The Economist noticed the numbers coming from Norway, they sent JohnJo Devlin to the show in Oslo.

JohnJo is a Nordic journalist and podcast producer.

“As a boy in London, it was strange to meet so many people who could buy an apartment in their early twenties,” he tells TV 2.

– In the center of London, only the heirs of the Russian oligarchs can buy such things.

He is also surprised that the Norwegian real estate market is poorly regulated.

– Many people think that Norway is a country with high taxes, but the real estate market stands out. Devlin points out that Norway has no national property tax, and almost no rent regulation and no inheritance taxes.

Moreover, we Norwegians can write off part of the interest on the tax. Most of us (92 percent) choose floating rates over fixed rates.

Adverse results

The result is a culture in which four out of five Norwegians own their homes. We have the second highest level of personal debt in the entire world. Every year since 1990, Norway’s debt has increased more than wages.

You almost have to love that the Norwegian state practically encourages people to take on debt, says Devlin.

– He adds that this has some adverse consequences – and points out that Norwegian homebuyers can simply shop at the many banks fighting for customers.

Because mortgages are a good business for banks: more than 35 percent of everything banks lend in Norway is home loans.

Nordea chief investment officer Robert Ness has seen the analysis and agrees that the Norwegian market is outperforming the world. By contrast, it highlights the United States, where some claim the country is on its way to a new housing bubble.

A bubble could burst and create a housing crisis.

Many are concerned about the increase in house prices in the United States, but this increase is not close to Norway, says Ness, who created the graph below.

The slight downturn in the market in July does not have a significant impact.

We have seven percent annual growth in Norway. And seven percent Much Compared to the total price increase, which was about 2% before the war in Ukraine.

All of this is being tested as a natural for the Norwegians who have taken good advantage of a market that has been booming for more than 30 years. After all, we haven’t seen a housing collapse and a serious banking crisis since 1990.

From the outside, it looks a little different.

– It is interesting to note that the majority of those who believe that the Bank of Norway raises interest rates too much Norwegians, says Robert Ness.

– Foreigners are more worried.

This is what you should do when the interest rate goes up, watch the video:

The European Union will tighten, Norwegian funding will weaken

From Brussels, the European Systemic Risk Management Board (ESRB) is closely monitoring the European housing market. The organization, led by European Central Bank President Christine Lagarde, states that Norway is among the countries involved high risk.

in Report earlier this year The organization wrote that Norwegian housing is expensive. Rising prices and debt growth. The Committee is particularly concerned that more and more Norwegians are taking out large loans approaching a maximum of five times their family income.

This may require close monitoring, the ESRB writes in a cautious manner. The organization adds that “the possibility of tightening the scheme” may be necessary.

ESBR’s recommendations are not binding, but part of the foundation when Norwegian Finanstilsynet reassess its mortgage regulations in the fall.

Norway Finans do not want to tighten. On the contrary, this summer’s Director of Banking and Capital Markets, Eric Johansen, thinks so The list played its part.

The good news is that ESBR believes Norway has so far taken the necessary steps to secure the housing market in a precarious situation. However, the organization ends the chapter on Norway with a torch of warning:

Perhaps Norway should relax building regulations (to boost housing construction) or remove tax-exempt premiums on mortgages.

I don’t see any shortage of housing

Of course, housing tax deductions should be removed. It provides incentives for excessively high prices and creating a housing bubble, says Professor Ola Grytten of the Norwegian School of Economics.

– But that won’t happen. Owning your own home is very popular in Norway. Politicians who talk about this are committing political suicide.

Chief Economist at Norway’s largest bank Predicts two rate hikes on the horizon. Are you afraid of the consequences in the housing market?

– Increase the interest rate by one percentage point, what we call four times, you will feel, of course. There may be a downward correction in home prices. But I don’t see a chair until today.

Grytten is primarily concerned about the high level of debt in Norway.

Explains that the supply side of the real estate market must react quickly to the failure of demand.

He believes that there are so many barriers around the Norwegian housing market that the Norwegian economy and housing market are not directly at risk.

Gretten highlights the requirements of banks to withhold funds and the spillover effects that support the housing market.

If interest rates rise sharply, buying stocks may become less attractive. Then the money can still be invested in real estate, even if the rising interest rates are negative in relation to house prices.

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