Why is housing so important to Norwegians?

– Why are people so interested in housing prices in Norway? asks Head of Communications at Bonum, Nikolaos Farmakis

– In Norway, nearly 8 out of 10 people own their own home, and for the vast majority it represents a large part of their personal finances, so most people will be vulnerable to a potential fall in housing prices. That's why people are interested in the housing market and housing prices and where they're heading, answers Macro Analyst at Bonum, Ann Kristin Aure.

– Do you think people see housing prices as part of their wealth? asks Nikolaos.

– Yes, I absolutely think so. Because if housing prices rise by 10-20%, it will represent a significant amount for most people. And conversely, if they fall, it will have consequences, explains Ann Kristin.

– What do you think would happen, for example, if we had flat housing prices going forward? Do you think people would be disappointed? asks Nikolaos.

– I think it would in a way go against everyone's expectations, absolutely. Considering if we look back at history, there have been several downturns, but on the whole there has been significant growth, says Ann Kristin.

– Do you think there might be a difference between younger and older homebuyers? comments Nikolaos.

– I definitely think so. Many of the younger homebuyers entering the market now haven't experienced the major crashes that perhaps our parents experienced earlier, says Ann Kristin.

– Yes, because I've read quite a bit about this, that the younger generation doesn't really know what normal interest rates are. And we've heard stories that seem quite distant to us, with interest rates of 16, 17 and 18%. Do you think that might affect their expectations of what it costs to buy a home later in life? asks Nikolaos.

– Absolutely. And that's one of the biggest factors that has contributed to the tremendous price increase recently, it's the low interest rate that makes it very affordable to finance a home purchase. And I can't imagine if mortgage rates were to reach 15-20%, how would people manage to handle that, answers Ann Kristin.

– I think it's quite interesting to hear what you think about small flats? That's typically the barometer in this industry. Recently there hasn't been much demand for them, but how does this actually work when it comes to these small flats? asks Nikolaos.

– What's quite interesting to see is that the price growth on small flats versus larger flats is somewhat different. Price growth on small flats rises quickly in good times, but as soon as the market turns, we see they respond very quickly, and an important reason for that, I think, is that there are many investors who invest in smaller flats to rent out, and they then withdraw quickly when the market turns, elaborates Ann Kristin.

– Everyone is so interested in housing, and if you say you work in the industry when you meet someone socially, you have something to talk about all evening. Why are there so many emotions around housing?

– It's as I mentioned earlier, it represents an important part of households' personal finances, so a change in housing prices will have great significance for most people. And then there's the fact that even though there are many known factors that affect housing prices, such as interest rates, there are other factors as well. Psychology, for which there is no data, has a major impact on the housing market, concludes Ann Kristin.