Both house prices and debt rise, but experts do not fear any collapse.
Norwegian housing prices continue to rise, and it is one-family homes that rise the most.
Housing prices in August are 2.9 percent higher than last month. Corrected for seasonal variations, prices were 0.7 per cent higher. Single-family houses have the highest price increase with formidable 6.0 percent.
In 1985, the average housing price in Norway was 577. 000 kroner. In 1998, the prize was awarded for the first time the million. Today, the average pub in Oslo costs a total of 6. 1 million kroner. In Bærum NOK 5.6 million and in Stavanger NOK 5.1 million. Husdrømmen becomes more expensive in and around the big cities.
In addition, people’s borrowing increases. The credit indicator from Statistics Norway shows that household gross domestic debt rose from 7.1 per cent to 7.2 per cent in the last twelve months. Yet, the experts are not worried that we can go on a click.
– Most goals indicate that Norwegians are edgy with their loans. The share of people’s income that goes to interest rates is low. Revenue growth is strong and the outlook for the Norwegian economy is good. Many place emphasis on debt, but forget the enormous wealth. Only this year housing wealth will rise a lot – while the stock market has been unexpectedly good, says economist at Terra, Jan Andreassen, to bonytt. no.
Do not think of collapse in the private economy
Andreassen believes that the coming year will be difficult for the world economy, but emphasizes that interest rates are falling.
– As long as oil prices are close to current levels, Norwegians will get wage growth also next year. We can not expect anything but moderate housing price growth, but little indicates that it will collapse. Thus, unlike most other countries, Norway has big profits in public, corporate, financial and household.
At the end of 2011, the debt was 2,500 billion. while the wealth according to DNB’s calculations was 7 200 billion. 65 percent of this is housing wealth, while the remaining 35 percent are financial assets.
Norwegians are good at saving
Silje Sandmæl, consumer economist at DNB and co-director of TV 3s Luksusfellen, is also not worried about Norwegian households. She believes Norwegians have learned.
The financial crisis has done something about ourselves, if it did not affect us to a large extent. Since the financial crisis broke out, Norwegians have become better at saving and it seems that we have got a more balanced relationship with saving and spending money, she says to Bonytt. no
Withstands higher interest rate
A survey conducted by Ipsos MMI for DNB shows that eight out of ten have an economic buffer of nearly 300. 000 and six out of ten state that a 2 percentage point increase in interest rates does not have an impact on the private economy at all.
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That means many are well-equipped. But in spite of good times there are always some who fall outside, but a collective luxury trap, Sandmæl has no faith in.
– I will still have enough to do as a programmer in the luxury trap, but also there we notice a change. While people fell into the trap because they had bought too many luxury, it’s more casual it goes in. The spiral also begins often because of cohabitation and income reduction. It is therefore important to prioritize debt repayment above all else so that the economy is not so vulnerable if something unforeseen would happen, Sandmæl emphasizes.
The housing market creates social bias
The reason for the significant housing price growth in recent years is that the Norwegian economy is going to be so shocked. Unemployment is low and decreasing. Most of us are in a safe job with good wage growth every year. With a rate in the 3’s it’s cheap to borrow money, explains adm. Director Peter Batta in Huseiernes Landsforbund (HL)
He points out that it is the most economically disadvantaged, who do not get loans that fall outside the property market and who are having difficulties in the housing market. But for anyone who owns own housing, it does not matter if house prices rise or fall, only they manage their loan obligations.
This is the dream for 800. 000 Norwegians
Chief Economist Jan Andreassen in Terra believes there will always be someone who borrows too much while others refuse to have debt.
However, what I strongly comment on is that the government limits loans, but only to the poor youth. This is a class struggle that the Red-Green government should be in favor of. It should be stopped.
According to a survey conducted by Ipsos MMI for DNB, four out of ten are getting help from parents to buy their first home. In Oslo, it’s all six out of ten. The reason why many young people need help are high housing prices, but also increased equity requirements.
Stress Test of Private Economics
The Norwegian housing wealth has also increased, one of Silje Sandmæls’s points. Overall, households have a significantly greater fortune than debt.
– But although the average investment is solid, a high debt ratio means that the economy is more vulnerable. It is therefore important to stress the economy for an interest rate increase as well as an income reduction, she says.
Sandmæl recommends borrowers to use this low-interest period to pay more on the loan and if you do not tolerate an interest rate increase, you should tie interest rates. Also make sure you have life insurance. Income can be halved if you get unemployed and are you in a relationship and one falls away, all expenses are suddenly paid with an income.
Gradually Lower Growth
DNB also believes that housing prices will decline in the years to come. The Bank expects growth of 7.5 per cent next year, and then gradually lower growth. By 2015, we expect a small fall in house prices, 0.5 per cent.
Peter Batta believes we must consider that housing prices will fall in the future, aiming for a 15 per cent fall in prices in autumn 2008.
– But as long as such price drops do not coincide with a strong general increase in borrowing rates, they do not cause most people to leave their homes. However, I can not see a big danger of falling house prices over the next two years. Until the labor market in Norway is too strong. We also have a larger population growth than new housing production. Demand is thus greater than the offer, especially in and around our big cities.
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