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Norwegian house prices fall sequentially in August, more sideways trend expected to continue ahead

Norwegian house prices dropped sequentially in August, while it remained unchanged on a year-on-year basis. Sequentially, house prices dropped 0.1 percent, as compared with the expectations of a rise of 0.2 percent. On an unadjusted basis, prices rose 0.8 percent, whereas on a year-on-year basis, house prices were up 2.2 percent in August. This underpins the view of subdued price growth in the second half of 2018 owing to rate hikes and increased supply, noted DNB Bank in a research report.

House prices in Oslo dropped 0.6 percent sequentially, while Bergen recorded a fall of 0.9 percent, the weakest growth among the largest cities. The largest rise was in Kristiansand, recording a rise of 2.4 percent.

Home turnover rose 8.4 percent year-on-year, while homes recorded sales of 7.7 percent on a year-on-year percent. The number of unsold homes was up 21.2 percent from July and is up by 2.8 percent from August last year to a high level in an historical perspective.

The development in June-August indicates a subdued momentum than from January to May and a more sideways trend is expected to continue ahead, said DNB Bank. Sales continue to be high, indicating that demand is still solid, but the number of unsold homes has still risen to high levels in an historical perspective. A rise in supply of new homes, rate hikes from September and low population growth is likely to dampen house price growth ahead, but it is unlikely to see a sharp downturn as the macro outlook in general is positive.

“The house price data does not change our view of a rate hike from Norges Bank in September”, added DNB Bank.

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