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Norwegian new home sales fall as property market cools

Norwegian new home sales fall as property market cools

OSLO: Sales of new homes in Norway fell by 13 percent in the first half of 2017, a constructors’ group said on Tuesday, as government efforts to cool an overheating property market bore fruit.

Sales dropped 30 percent year-on-year in June alone, the Norwegian Home Builders’ Association (NHBA) also said.

“We are happy to see a market that is more in balance… That means that prices will not rise as much as earlier, which is a healthy sign,” its head Per Jaeger said.

Seasonally adjusted prices fell 0.2 percent in July from June, declining for the third month in a row, though prices were still up 4.8 percent year-on-year, industry association Real Estate Norway said last week.

House prices have risen sharply in recent years, particularly in and around Oslo, as demand for homes outstripped supply, with the annual rise hitting 13 percent in February.

A tightening of mortgage regulations by the right-wing minority government, which faces parliamentary elections in September, took effect in January, obliging banks to become more selective in their lending.

Market analysis company Prognosesenteret, which conducts the monthly NHBA survey, said it expected sales of new homes to stabilise at around 30,000 this year, down from 34,000 last year.

“That would mean that the level is back to normal,” Prognosesenteret head Bjoern Mangor Birkeland told Reuters.

There were 8 percent fewer new homes started in June compared to the same month a year ago, though the number was up 6 percent in the first half of 2017, the NHBA survey showed.

In May, housing starts were down by 5 percent year-on-year.