Housing prices in Oslo rise in January

The housing market in Oslo has been characterised by falling prices and high supply since autumn. Uncertainty and negative newspaper headlines have undoubtedly led to home buyers taking a wait-and-see approach. In January, however, housing prices increased, and several factors point towards this trend reversing.

Positive development on the supply side: fewer unsold properties now than in autumn

The supply of unsold properties in Oslo remains high, and new properties now account for over half of the supply. Although the number of new properties has increased somewhat in recent months, the total supply is approximately 20% lower than the peak in early autumn. Activity in the market is good, although it generally takes slightly longer to sell. According to Eiendom Norge, the turnover time for resale properties in Oslo has increased from 15 to 41 days between January 2017 and January 2018. However, after the new year, several estate agents report higher activity in the market, and the supply side is falling. In January, more properties were sold than put on the market, and 12% more resale properties were sold than in January 2017. Oslo has not seen more properties sold in the month of January since 2013, and at national level we have to go all the way back to 2009 to find a January month with a lower number of resale properties put up for sale than this year, according to Eiendom Norge.

Average housing prices in Oslo higher in 2017 than in 2016

Housing prices in Oslo are 9.4% lower in January 2018 than 12 months ago, according to Eiendom Norge. Nevertheless, housing prices in 2017 ended on average 6.1% higher than in 2016. The price decline we have seen is most likely a short-term price correction. This reduces the risk of a sudden and more marked decline further ahead.

The price development for Oslo in January was, however, positive, with growth of 2.7%. Eiendom Norge only seasonally adjusts the national figures, but the growth would have been positive with seasonal adjustment as well. Housing prices increased by 2.0% for the country as a whole, but adjusted for seasonal variations, prices fell by 0.4%.

Although the housing market has been set back somewhat at national level in recent months, there are large regional differences. Several areas within commuting distance of Oslo are experiencing positive development in housing price growth. The Østfold towns Fredrikstad and Sarpsborg have had combined growth of 5.2% over the last 12 months, and the Drammen region has had growth of 4.6% in the same period.

Outward migration trend may reverse during 2018

According to Statistics Norway, there is still net outward migration from Oslo to other municipalities, which may be connected to high housing prices in Oslo and low supply until the start of 2017. Akershus, on the other hand, has had an increasing trend of net domestic migration, which may support this theory. There is also no doubt that the effect of the mortgage lending regulations that came into force in January 2017 hit Oslo hardest. This spring, the regulations, which are originally due to apply until 30 June 2018, are to be revised. A possible adjustment of the mortgage lending regulations, a better labour market and increased supply of housing will probably help reverse this outward migration trend.