This September we have seen quite significant changes in the home buying market in Norway.
Therefore I have to write about the market and housing prices – AGAIN.
Hope you are OK with it.
After all, to keep oneself updated on the market is a big factor for achieving a successful purchase!
Two important factors implicate a development towards a buyers’ market this autumn:
- Decrease in prices with 2,2 % in Oslo – 2,5% in september
- More houses up for sale in september – 17% more than last year
Falling prices are expected for the rest of the year and probably also in 2023. Then it will start to increase again according to the forecasts. The sales volume is now back on pre pandemic level.
The reason for the decrease in prices is obviously the increased mortgage interest and increase in prices on electricity and other living costs.
A buyers’ market is good news if you are buying a home in Norway for the first time.
If you already have a property to sell and want to buy a new one, and your mix of equity of mortgage is comfortable, there is no reason why you should not buy a new home now, if you feel it is needed.
Just remember the rule – Sell and buy in the same market
Timing is everything
Download my booklet about home buying in Norway for free here
The economy in Norway, as in a lot of other countries, are in a strange situation right now. We experience all time soaring prices in food and energy prices. At the same time, we must cool down the economy by raising the mortgage interests. So far this has not affected the prices of homes very much. August had rising prices in most part of the countries, in average they increased with 1,9%. The number of homes for sale the market has increased in august and will continue to increase. This is good news for the buyers, because lack of homes for sale usually means that the bids increase to very high levels. As you probably know we are practising open bidding rounds according to the auction principle in Norway.
It is expected that the home prices will decrease this fall when people feel the effect of interest rate effects. And the banks’ lending policy will change according to higher interest rates. They are obliged to stress test that the customer can manage a 5% increase of interest. That means that people will get less money for their home buying and the bidding rounds will become much cooler.
Norwegian Home buyers are financing their home buying in all essentials by bank mortgages. Read more about home buying financing in Norway here.
Big drop in the sale of cottages.
Norwegian people are crazy about cottages or “hytta” as we called it. Many people even have two cottages, me included. If you do not own one yourself, you may have access to one through your family. During the pandemic, the cottage sales were extremely high, both in volume and price. Now the sale has dropped by 45% – in volume. But not yet in price. But at some point, close to now, I think we will see a drop in prices too. So, if you are planning to buy a cottage in Norway this fall will be a good opportunity. And please ask me for help. The buying process is the same as for homes and there I am an expert. And as a cottage lover and user I have a good pulse on the holiday home market.
Sorry about all the economic talk in this blog. But in Norway the housing market is so depended on the economy in general. It will serve you well to follow to keep yourself updated on the market.
If you download my booklet about home buying in Norway you will get my tips about home buying and market updates direct in your inbox.
And I will do what I can do keep you in the loop here on the blog!
Almost 80% of Norwegian families own their own home. Or maybe we should say, their bank owns it. But most Norwegian do not worry about their debt ratio. Maybe because we have a solid bank system and regulation regarding how big mortgage the bank can give people according to equity and monthly income.
In general, the bank requires 15% of the sales value in equity, you cannot have a mortgage that exceeds 5 times the family income. And you have to be able to pay an increase in interest with 5%. This is public regulations from the government that the banks have to follow. This is difficult to fulfil for some first-time buyers. Therefore 50% of them get help from their parents to meet the banks requirements.
What about foreigners or non-Norwegian citizens, will they be able to get a mortgage in Norway?
The answer is yes, on certain conditions.
Normally the bank will require 25% of the sales value as equity.
You have to have a Norwegian D-number or identification number. https://www.udi.no/en/word-definitions/d-number/
With a D-number you can apply for a bank account in Norway, which you will need.
But you are free to apply for a loan in different banks.
The banks requires that you are employed in Norway, or get your salary paid through a Norwegian bank account. Income abroad is not sufficient.
Regarding your equity you probably have to transfer them to your Norwegian bank, or at least give a proof that you have the funds in your bank at home.
When you transfer money you have to give an account of the origin of the funds. Due to money laundry regulations.
Much easier to buy a home, if you already have the cash
If you don’t need a mortgage to buy a property you will get the D-number after the purchase, from the Norwegian Mapping Authority (property Register). The money will go through a bank in Norway to the real estate agency, who will take care of the registration and send the D-number application. In that process you have to give an account of the origin of the funds, due to money laundry regulations.
This is what I know about financing rules for foreigners. If you contact me can help you to get in contact with the right banking people to answer your more detailed questions.
The housing prices have been rising every month in 2022. At the end of the quarter the prices are 7,2% higher than the beginning of the year. In Oslo the increase is a little bit lower with 6,9% increase in the same period.
There have been far too few houses on the market compared with the number of potential buyers.
The realtors are now telling that they have received many sales assignments lately and it is expected that there will be more homes for sale after the Easter holiday. That is good news for the buyers.
The big increase in already high house prices is not healthy in the long run.
Also, other prices are increasing in Norway and the inflation is increasing. Therefore the Central Bank of Norway has notified that the mortgage interest will increase 7 – seven times before the end of 2023. A rice of 0,25% has already been completed in March this year.
The interest rate is the most important factor when it comes to housing prices. It is therefore expected that the housing prices will flatten out throughout the spring.
There have been very low interest rates in Norway for many, many years. Many home buyers have not experienced increases in interest rates. Although the banks have been obliged to stress test their mortgage customers’ ability to manage an increase in the interest with 5%, it can be a challenge for some people to manage their housing costs. But experts believe that most people will manage this, they just have to reprioritize. Anyhow, a more moderate price development in housing prices will be a good thing.