Tuesday, January 18

Experts believe omikron can accelerate house prices

There is a lot of uncertainty about how the new infection boom will affect the housing market. Several experts believe it can contribute to more speed.

MAY INCREASE: Uncertainty about the new variant of the coronavirus can affect the housing market.


House prices fell 0.6 percent in November, new figures from the brokerage industry show. The big question now is how the housing market will react to the new variant of the coronavirus.

Grethe Meier, CEO of the real estate chain Privatmegleren believes that the housing market is strengthening in connection with the contagion situation.

– Housing sales are directly affected by the severity of the infection. Many people probably feel the feeling of little space when we now return to the home office, home school and home kindergarten. We can also not travel, and maybe spend less money on a restaurant. What we are going to spend money on now is housing, says Meier, but at the same time points out that electricity prices are working in the opposite direction.

For a long period during an earlier phase of the pandemic, the Ministry of Foreign Affairs advised against traveling to other countries, but the Global Travel Council was abolished in October. However, after the omicron eruption, they have discouraged travel to countries in southern Africa.

– Will be normalized

Meier believes the housing market will normalize when the infection returns.

– The housing market was so strong in November, despite interest rate increases. Norges Bank will probably consider interest rate increases in more detail, says Meier.

Adjusted for seasonal variations, prices rose by 0.3 per cent, according to recent house price statistics from Eiendom Norge.

Corona controls the housing market to a greater extent than the interest rate now, according to Meier.

– But it is clear that prices in the long run will be affected by interest rate increases, says Meier, who at the same time believes that most households will tolerate smaller interest rate increases.

Do not believe in explosive price growth

Chief economist Nejra Macic at the Forecast Center believes that we will have fewer interest rate increases than announced, if the omicron leads to a new long-term shutdown and a slowdown in economic growth.

– Then house prices could rise more than the 2-3 percent that we initially expect for 2022, Macic writes in an SMS to E24.

Macic says that they also know from their own surveys that there are a number of Norwegians who have accelerated housing exchange during the pandemic.

– Thus, some of the potential demand growth has probably already been taken out. We do not think we will get a new round of equally explosive price growth similar to the one we had from the summer of 2020 to the spring of 2021 onwards, even in an imaginary situation where there will be no more interest rate increases, says Macic.

The interest organization Norske Boligbyggelags Landsforbund (NBBL) points to the uncertainty as a result of the new variant of the virus.

– House price inflation has stabilized, but if Norges Bank withdraws as a result of the omicron, they risk heating up inflation again, says Christian Frengstad Bjerknes, chief economist at NBBL in a statement.

Carl O. Geving, CEO of the Norwegian Real Estate Association, we expect a well-functioning housing market in the future.

– The unresolved corona situation can lead to a lower interest rate path and help maintain the relatively strong demand for housing, says Geving.

Against the stream

Harald Magnus Andreassen, chief economist at Sparebank 1 Markets, on the other hand, does not believe that the housing market will receive a “boost” due to the omikron.

– Last time the interest rate fell, but this time it is a question of the interest rate potentially not rising, Andreassen says.

He points out that we still do not know everything about whether the vaccine protects against serious disease by infection with the omicron variant. There is therefore a lot of uncertainty about the future economic effects as well.

Several chief economists believe that the planned December increase from Norges Bank can be postponed.

«The risk of Norges Bank postponing the announced withdrawal in December has increased significantly. Maybe it’s better to wait and see? For example, until January? », Writes Swedbank’s Kjetil Martinsen.

Andreassen believes that Norges Bank may not raise interest rates in December, in a worst-case scenario, however.

– Today I believe most in raising.

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